Saral TaxOffice

Audit Report
- 1. How to ascertain the errors if the return is rejected?
  - When the return is rejected, the reasons for the same would be displayed under the ‘status of xml upload’ view facility
- 2. Do we get any mail in case of rejection of return with possible reasons?
  - Yes. Mail will be automatically sent by the system to the Assessee’s e-mail ID mentioned/available in the registration data. Hence, it must be ensured that the e-mail ID in the ACES registration database is updated. You may also check the spam folder.
- 3. Instructions for filling up the new ST-3 offline return
- 4. What are the skill sets and staffing needs of an internal audit activity?
  - A broad range of skills and expertise and ongoing professional development are critical to the formation and maintenance of an effective internal audit activity. Essential elements include in-depth knowledge of the organization’s industry and internal audit standards and best practices; technical understanding and expertise; knowledge of skills for implementing and improving processes in both financial and operational areas; strong communication and presentation skills; and professional certification, e.g. CIA.
    
    Although some co-sourcing and outsourcing might be necessary when unique competencies and specialty skills are not affordable or available, the oversight and responsibility for the internal audit activity cannot be outsourced.
    
    Today’s internal auditors must provide to their audit committees explicit assurance on organizational governance, as well as meet ever-increasing demands of management and other stakeholders. They must excel as internal control and risk management experts to ensure the controls over key systems and business processes are robust and effective. To meet these high expectations, a solid staffing strategy is essential. It is the responsibility of the CAE to establish an effective program for selecting and developing the internal audit team.
- 5. Whether audit conducted under section 44AD, 44BB, 44BBB & 44AE is required to be filed electronically?
  - Sections 44AD, 44BB, 44BBB & 44AE provide that in specified cases the assessee is required to get his accounts audited and furnish the report of such audit as required under section 44AB. Therefore, e-filing is applicable to such audits also.
- 6. What is the procedure to furnish revised audit report electronically?
  - In case of revision, the audit report should be given in the manner suggested by the Institute in SA-560 (Revised) “Subsequent Events”. It may be pointed out that report under section 44AB should not normally be revised. However, sometimes a member may be required to revise his tax audit report on grounds such as:
    
    (i) Revision of accounts of a company after its adoption in annual general meeting.
    
    (ii) Change of law e.g., retrospective amendment.
    
    (iii)Change in interpretation, e.g. CBDT’s circular, judgments, etc.
    
    (iv)Any other reason like system/software error requiring change in report already
    
    In case, where a member is called upon to report on the revised accounts, then he must mention in the revised report that the said report is a revised report and a reference should be made to the earlier report also. In the revised report, reasons for revising the report should also be mentioned.
    
    The e-filing portal allows uploading such Revised Audit Report by the CA for the same PAN and Assessment Year.
- 7. We have e-filed the audit report and also filed the ITR but up to that moment the audit report is not approved by the assessee. What will be the consequences of this mistake and what should be done from our side to rectify this mistake?
  - Yes and we have experienced it so it is also a shortcoming of the system since in that case the E-filing system should have given the “error signal” and in our case we E-filed the audit report and by mistake also filed the ITR on behalf of the assessee even before the approval of the audit report and it was accepted without showing any “error message” but when mistake was noticed by us we approved the audit report on behalf of the assessee .

Balance Sheet
- 1. Cessation of business of providing taxable service -what is to be done with the Service Tax Registration?
  - The Service Tax Registration certificate (ST-2) should be surrendered to the concerned Central Excise/Service Tax authorities.
- 2. A taxpayer transfers his business to another person - what is to be done with the Registration?
  - In the event of transfer of the business, the transferee should obtain a fresh certificate of Service Tax registration. The transferee will have his own PAN.
- 3. What is internal auditing?
  - Performed by professionals with an in-depth understanding of the business culture, systems, and processes, the internal audit activity provides assurance that internal controls in place are adequate to mitigate the risks, governance processes are effective and efficient, and organizational goals and objectives are met.
    
    Internal Auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
    
    Independence is established by the organizational and reporting structure. Objectivity is achieved by an appropriate mind-set. The internal audit activity evaluates risk exposures relating to the organization’s governance, operations and information systems, in relation to:
    - Effectiveness and efficiency of operations.
    - Reliability and integrity of financial and operational information.
    - Safeguarding of assets.
    - Compliance with laws, regulations, and contracts.
- 4. In case tax audit is conducted by joint auditors, what is the procedure to upload tax audit report electronically?
  - The e-filing portal allows the report to be uploaded by a single auditor. Therefore, the joint auditors may mutually agree and decide the auditor who shall upload the report. However, all the joint auditors should sign the hard copies.
    
    As per the ICAI’s “Guidance Note on Tax Audit u/s 44AB of the Income-tax Act, 1961”, it ispossible for the assessee to appoint two or more chartered accountants as joint auditors for carrying out the tax audit, in which case, the audit report will have to signed by all the chartered accountants. As per Standards on Auditing 299 (Responsibility of Joint Auditors) issued by ICAI, normally, the joint auditors are able to arrive at an agreed report. In such case, the physical copy should be signed by all the auditors. Thereafter, any one of them may upload the report.
    
    However, where the joint auditors are in disagreement with regard to any matters to be covered by the report, each one of them should express his own opinion through a separate report. A joint auditor is not bound by the views of the majority of the joint auditors regarding matters to be covered in the report and is required to express his opinion in a separate report in case of a disagreement. Such separate reports are also to be uploaded on the portal.
- 5. What is recommended system requirements for facilitating e-filing?
  - To increase the computer processing speed all the previous versions of java be removed from the computer. To use the e-forms utility install Java Run time Environment Version 7 update 13 (jre 1.7 is also known as jre version 7) or https://incometaxindiaefiling.gov.in
- 6. What is the difference between Tax audit and Company audit?
  - Tax Audits
    Tax audits are required under Section 44AB of India’s Income Tax Act 1961. This section mandates that every person whose business turnover exceeds INR1 crore and every person working in a profession with gross receipts exceeding INR25 lakh must have their accounts audited by an independent chartered accountant.
    
    It should be noted that the provision of tax audits are applicable to everyone, be it an individual, a partnership firm, a company or any other entity. The tax audit report is to be obtained by September 30 after the end of the previous fiscal year. Non-compliance with the tax audit provisions may attract a penalty of 0.5 percent of turnover or INR1 lakh, whichever is lower.
    
    There are no specific rules regarding the appointment or removal of a tax auditor.
    
    Company Audits
    The provisions for a company audit are contained in the Companies Act 1956. Every company, irrespective of its nature of business or turnover, must have its annual accounts audited each financial year. For this purpose, the company and its directors have to first appoint an auditor at the outset. Thereafter, at each annual general meeting (AGM), an auditor is appointed by the shareholders of the company who will hold the position from one AGM to the conclusion of the next AGM.
    
    The new Companies Bill 2012 provides that an auditor shall be appointed for a term of five consecutive AGMs. Individuals and partnership firms, auditors cannot be appointed for more than one or two terms, respectively. After the completion of the term, the auditor must be changed.
- 7. We are not able to keep track of E-mails daily but wants to know how many assessees have added us as CA. Is it possible to see it at a glance?
  - Yes you can see it in your account. Go to My Account→ view client List and then you will get the List.

Income Tax
- 1. What does the word “person” appearing in the definition of taxable service mean?
  - The word “Person” shall include any company or association or body of individuals, whether incorporated or not. Thus this expression includes any individual, HUF, proprietary firm or partnership firm, company, trust, institution, society etc.
- 2. Does one require registration certificate for each service separately?
  - Only one Registration certificate is to be taken even if the person provides more than one service from the same premises for which registration is sought. If there is centralized registration, only one registration certificate is required for services provided from different premises, declared in the application for centralized registration.
- 3. What is to be done when the existing assessee commences providing of a service not mentioned in the registration certificate?
  - An application has to be made in ST-1 for amendment (endorsement) in the Registration certificate indicating only the amendment/rectification required to be made in the registration certificate, along with a copy of the original registration certificate. No fresh documents are required for verification by the officer unless there is change in the details given in original or earlier application(s).
- 4. How should an organization go about sourcing its internal audit activity?
  - The responsibility for establishing and overseeing the scope and performance of internal auditing cannot be outsourced.
    
    Internal auditing is the responsibility of an organization’s board — or equivalent governing body — and senior management.
    
    Internal auditing should be managed within the organization by a chief audit executive who is accountable to the organization’s board and chief executive officer.
    
    If an internal audit activity is outsourced, the chief audit executive within the organization should be responsible for overseeing the service contract and the overall quality assurance of these activities, reporting to senior management and the board regarding internal audit activities, and following up on engagement results.
- 5. Whether Name / Date of Birth (DOB) of the Chartered Accountant given in PAN database (as per ITD e-filing website) is to be matched with the ICAI database for successful registration in the e-filing portal?
  - E-filing portal verifies the Name of Member and Date of Birth entered in Registration Form from ICAI Database and also PAN Database. In case there is difference / mismatch of details between the two Databases the portal will not allow registration.
- 6. In case of e-filing of audit reports what is the date of audit report?
  - Date on which the report is physically signed by the Auditor shall be the date of audit report.
- 7. Is it sufficient to furnish the unsigned PDF copy of the profit and loss account and Balance sheet or the scan copy of the same duly signed by the CA and assessee is required ?
  - This is very common question and it has been asked by so many professionals.
    In my opinion the profit and loss account and Balance sheet should be filed duly signed by the assessee and CA i.e. the singed (both by assessee and CA) Balance sheet and profit and loss account is to be scanned and the PDF copy of the same is required to be e-filed. There are reasons of my opinion which are being explained below:-
    (i). The 3CB/3CD can only be filed after completion of audit and in that case the Balance sheet and profit and loss account are also signed by the assessee and CA so at that time these is no existence of unsigned Balance sheet and profit and loss account. So here Balance sheet and profit and loss account means audited Balance sheet and profit and loss account and audited profit and loss account and Balance sheet can only be construed as “Singed Profit and Loss account and Balance sheet” both by CA and assessee. you have to file the signed audited Balance sheet.
    (ii). The second reason is based on the fact that in most of the cases the assessee is not “practically” aware about the existence and importance of the Digital signatures and E-filing of ITR and these are handled by the CAs and even the audit reports are approved by the CAs on behalf of the assessee with the digital signatures of the assessee though in that case they are working in capacity other than auditor(Tax consultant or Tax advisor) of the assessee . So if you took the physical signatures of the assessee on the Balance sheet and profit and loss account before finally uploading it, it will be a safer practice.

Service Tax
- 1. Service Tax
  - Service Tax
- 2. What is Service Tax?
  - It is a tax levied on the transaction of certain specified services by the Central Government under the Finance Act, 1994. It is an indirect tax, which means that normally the service provider pays the tax and recovers the amount from the recipient of taxable service.
- 3. Can recipient of service also be asked to pay service tax?
  - In certain cases Government may shift the liability of payment of service tax to the receiver of service as a measure of administrative convenience. It is often referred to as ‘reverse charge’ in common language.
- 4. Under which authority service tax is levied?
  - Vide Entry 97 of Schedule VII of the Constitution of India, the Central Government levies service tax through Chapter V of the Finance Act, 1994. The taxable services are defined in section 65 of the Finance Act, 1994. Section 66 is the charging section of the said Act.
- 5. What are the taxable services?
  - The list of the services is available at home page of web site servicetaxinda.co.in . The Accounting Heads are also mentioned in the list, which need to be mentioned on the tax payment documents (GAR-7 or TR-6), while depositing the Service Tax and other related dues in the banks.
- 6. What is the rate of service tax?
  - At present, the rate of service tax is payable at 12% on the “Gross value of taxable service”. In addition to this educational cess is charged at 3% on the service tax amount. A total of 12.36% is charged on the value of the taxable service.
- 7. Who is liable to pay service tax to the government?
  - The person who provides the taxable service is responsible for paying the Service tax to the Government.
- 8. Is there any exemption from payment of service tax to Diplomatic Missions for official use and individuals and their family members posted in a Diplomatic Mission?
  - Yes, exemption from payment of service tax relating to all taxable services is available to Diplomatic Missions for official use of services as well as for the personal use or for the use of the family members of diplomatic agents or career consular officers posted in a foreign diplomatic mission or consular post in India, by notifications 33/2007- ST dated 23rd May, 2007 and 34/2007-ST dated 23rd May, 2007 respectively, but subject to procedures specified under those notifications.
- 9. What is the time limit within which the Service provider should register with the Central Excise department for the service tax purpose once the service is notified or once the assessee commences the business of rendering the taxable service?
  - Every person liable to pay the service tax should make an application to the concerned Central Excise officer for registration within a period of 30 days of the Service tax having come into force. In cases where a person commences the business of providing a taxable service after such service has been notified, he is required to make an application for registration within a period of 30 days from the date of commencement of his activities.
- 10. Whether a service provider can make payment of service tax and file returns before the grant of registration by the proper officer?
  - A service provider can pay service tax and file returns immediately after applying for registration.
- 11. How does the internal audit activity go about prioritizing its resources?
  - Effective prioritization involves staying in sync with the organization’s risk priorities and taking a risk-based approach to internal audit planning. By continuously monitoring organizational changes that might alter the plan, the CAE should be well equipped and positioned to make informed and educated recommendations to management and the board on the most effective use of internal audit resources.
    
    Given the potential size of the audit universe, the related scope of work, and the need for efficient use of limited internal audit resources, it is critical to prioritize and plan audit engagements based on an annual risk assessment that is viewed from the perspective of organizational goals and objectives.
- 12. Why should an organization have an audit committee?
  - The audit committee, or other appropriate independent oversight subset of the board of directors, the key oversight group of the internal auditors, is critical to ensuring the organization has strong and effective processes relating to independence, internal control, risk management, compliance, ethics, and financial disclosures.
    
    An audit committee typically serves as the liaison among the board of directors, external auditors, internal auditors, and financial management. Generally, the audit committee’s purpose is to assist the board in overseeing the:
    - Reliability of the entity’s financial statements and disclosures.
    - Effectiveness of the entity’s internal control and risk management systems.
    - Compliance with the entity’s code of business conduct, and legal and regulatory requirements.
    - Independence, qualifications, and performance of the external auditors and the performance of the internal audit activity.
- 13. If tax audit report is issued and the ITR is filed prior to issuance of the Notification No. 34/2013, dated 01-05-2013 which mandates e-filing of audit reports. In such cases whether e-filing of audit reports is required?
  - CBDT Notification No. 34/2013 dated 1-05-2013 provides that the rules prescribed therein shall be deemed to have come into force with effect from the 1st day of April, 2013. Accordingly, even if ITR has been filed prior to issuance of said Notification, Tax Audit report is required to be e-filed separately.
- 14. What is the difference between statutory audit and internal audit?
  - Statutory audits are conducted in order to report the state of a company’s finances and accounts to the Indian government. Such audits are performed by qualified auditors who are working as external and independent parties. The audit report of a statutory audit is made in the form prescribed by the government agency.
    
    Internal audits are conducted at the bequest of internal management in order to check the health of a company’s finances, and analyze operational efficiency of the organization. Internal audits may be performed by an independent party or by the company’s own internal staff.
    
    In India, every company whose shares are registered on the stock exchange must have an internal auditing system in place. For a company whose shares are not listed on the stock exchange, but whose average turnover during the previous three years exceeds INR5 crore, or whose share capital and reserves at the beginning of the financial year exceeds INR50 lakh, must have an internal auditing system in place. The statutory auditor of the company must report on the internal auditing system of the company in the audit report.
- 15. Is it possible to file the ITR first and then e-file the audit report? What should be the exact sequence of the actions in this respect?
  - Here see the information required to be filled the ITR and there is a column in the ITR which requires the “date of furnishing the audit report”. Hence first you have to E-file the audit report and then it has to be approved by the assessee and ITR can be filed by the assessee thereafter. This should be the exact sequence.
- 16. What should be treated the date of Furnishing of audit report? Is it the date on which the Tax audit report is e-filed by the CA or the date on which the audit report is approved by the assessee? What is the difference between the date of report of the audit (which is also a separate requirement of the ITR) and date of furnishing of audit report?
  - First take the “date of report of audit” and it means the date which is mentioned on the face of the audit report i.e. the date on which the audit report is signed by the CA and there is should be confusion about the date of report of audit.
    There may be some confusion about the date of “furnishing of audit report”. There may be a opinion that date of E-filing of audit report should be the date of submission of audit report and second opinion is that the process of E-filing of audit report is completed when it is approved by the assessee so the date of approval of audit report by the assessee should be taken as the date of furnishing of the audit report.
    Now see, the fact is that the audit report is E-filed on a particular date and the subsequent event or date of its approval will not change “this fact” hence if the audit report is “approved” then the date of E-filing of audit report should be the date of “furnishing of audit report”. Let us try to verify this fact from one of our case:-
    The audit report of one of our client was uploaded on 13/08/2013 and it was approved on 23/08/2013 and in the work list of the assessee after approval of the audit report the date of submission is mentioned as 13/08/2013.Further in the Account of CA the date of filing for the same assessee is mentioned as 13/08/2011 though the assessee has approved the audit report on 23/08/2013.

Tax Office

1. Registration
- Registration Process
2. Whom and where should one approach for registration?
- Generally, all Commissionerates of Central excise have a Service Tax Cell, headed by Assistant Commissioner/Deputy Commissioner. However, in certain Commissionerates, separate Service Tax Divisions have been constituted. The work is also delegated to Central Excise Divisions in many Commissionerates. A prospective assessee of Service Tax can approach the Assistant Commissioner/Deputy Commissioner in charge of Service Tax cell of the jurisdictional Commissionerates or Central Excise Division for registration depending upon the arrangements made in the Commissionerates.
3. What is the procedure for registration?
- A prospective taxable service provider seeking registration should file an application in Form ST-1(in duplicate) before the jurisdictional Central Excise officer/Service Tax officer within thirty days from the date of notification of the taxable service. Department is required to issue the registration certificate within 7 days of the receipt of the application. In case of failure to issue registration certificate within 7 days, the registration applied for is deemed to have been granted and the assessee can carry on with his activities.
4. Who should apply for registration under service tax law? Is there any process for centralized registration?
- All persons providing taxable services are required to register with the Central Excise department. They would have to take only one registration even if they operate from more than one premise but have centralized billing at one place. However, if such persons do not have Centralized billing at one place, then they will have to register at each place separately. Besides, only one registration is required to be taken even if an individual provides more than one service but from the same premises.
5. What is to be done with the registration when, a)A registered assessee transfers his business to another person b)A registered assessee ceases to carry out the activity for which he has registered.
- a) When a registered assessee transfers his business to the other person, the transferee should obtain a fresh certificate of registration.
  
  b) When the registered assessee ceases to carry on the service activity for which he is registered, he should surrender his registration certificate to the central excise authorities.
6. Is there any penal provision for non-registration?
- Yes. Any offence of failure of non-registration will attract a mandatory penalty of rupees five hundred.It is not mandatory to have a PAN for obtaining registration in Service Tax. However, it is advisable for Service tax assesses to have a PAN No. as Service Tax Code (STC) Number based on PAN allotted by Income tax department has been introduced in Service Tax also. The main objective of allocating a number is to identify the concerned person where he is located and registered.
7. Is PAN allotted by the Income Tax Department a must for obtaining Service Tax Registration?
- Having PAN is essential, because the Service Tax Registration number is generated based on the PAN issued by the IncomeTax Department. However, in the absence of PAN, a temporary Service Tax registration number would be issued for assessees who are not having PAN at the time of filing the application (ST-1) for Service Tax registration till such time they obtain PAN. Once the PAN is obtained, the Service Tax assessee should obtain the PAN – based Service Tax Registration number.
8. Whether a service provider can make payment of Service Tax and file returns before the grant of registration by the proper officer?
- No. However, service provider should apply well in advance to obtain registration, which is normally granted within 7 days of filing of application. Since service tax is payable once in a month or quarter, an assessee gets sufficient time for registration.
9. Is there any penal provision for non-registration?
- A person, who fails to take registration within the time stipulated shall be liable to pay penalty which may extend to Rs. 5,000/- or Rs. 200/- per day after the due date, whichever is higher. The provisions says, a person fails to “take” registration, whereas it should have been fail to “apply” registration, as some time the Department take it own time to grant the registration as recognized by the Board in its instruction Dy. No.294/Com(ST)/2007 dated 03.09.2007.
10. Payment of service tax
11. How to pay Service Tax?
- You may pay service tax by G.A.R.7 (previously known as TR6 Challan which was yellow in color) in the specified branches of the designated banks. The details of such Banks and branches may be obtained from the nearest Central Excise Office/Service Tax Office. Service Tax can also be paid electronically, called e-payment facility.
12. When is Service Tax required to be paid for individual or a proprietary or partnership firm.
- It is to be paid Quarterly – By the 5^th day of the month following each quarter, and by the 6^th day of the month following each quarter if the duty is deposited electronically through internet banking. For ex: service tax for the quarter ending 30^th June is to be paid by 5^th or 6^th of July as the case maybe.
  
  For all the other categories – Monthly payment should be done i.e. by the 5^th of the succeeding month or by the 6^th of the succeeding month if the return is filed electronically through internet.
  
  Exception: For the month of March or quarter ending March, all assesses have to pay by 31st of March of the Calendar year (Rule 6(1) of the STR, 1994.
13. If full details are not available to assess correct service tax, how can service be paid by due date?
- You may seek in writing, provisional assessment, giving reasons, from the jurisdictional Asst/Deputy Commissioner of Central Excise/Service Tax under rule 6 (4) of the STR, 1994. He may allow payment of Service Tax on provisional basis, on such value of taxable service as may be specified by him.
14. Can excess payment be adjusted while paying tax for the next month or quarter?
- i. Yes. Where an assessee has paid to the credit of the Government in respect of a taxable service, which is not so provided by him, either wholly or partially for any reason, the assessee may adjust the excess Service Tax so paid by him (calculated on a pro-rata basis) against his Service Tax liability for the subsequent period, if the assessee has refunded the value of taxable service and the Service Tax thereon to the person from whom it was received (Rule 6(3) of the STR, 1994).
  
  ii.Further, assesses having centralized registration who paid excess amount of Service Tax, on account of non-receipt of details regarding the receipt of gross amount for the services at his other premises or offices, may adjust such excess amount against the Service Tax liability for the subsequent period and furnish the details of such adjustment to the Jurisdictional Superintendent of Central Excise/Service Tax within 15 days from the date of such adjustment (Rule 6(4A) of the STR, 1994).
  
  iii. In all other cases of excess payment, refund claims have to be filed with the Department. The refund claims would be dealt as per the provisions of Section 11B of the Central Excise Act, 1944, which is made applicable to Service Tax under Section 83 of the Finance Act 1994.
  
  iv.It is important to note that any amount of Service Tax paid in excess of the actual liability, is refundable, only if it is proved that the claimant of refund had already refunded such amount to the person from whom it was received or had not collected at all (Section 11 B of the Central Excise Act, 1944 which is applicable to Service Tax matters under Section 83 of the Act).
15. What is the head of account into which the Service Tax amount is to be paid in respect of various services?
- Separate “Head of account” has been specified for each taxable service. This must be mentioned on G.A.R – 7 (previously known as TR -6) challans for proper accounting.
16. What is GAR-7 challan? Where is it available?
- GAR-7 is the document for payment of service. It is available in any stationery shop selling government items or you can download this challan from www.servicetaxindia.co.in.
17. Can the Service Tax be deposited in Non-designated banks?
- No. For payment of Service Tax, specific bank has been nominated for every Central Excise/Service Tax Commissionerates. If Service Tax is deposited in a Branch/Bank other than the nominated Bank/Branch, it amounts to non-payment of Service Tax (Rule 6(2) of the STR, 1994). In any case, a non designated bank will not accept service tax challans.
18. Whether the payment of Service Tax is to be made for the billed amount or for the value received?
- The Service Tax for a particular period is payable on the amount/value of taxable service received during that period and not on the gross amount billed to the client.
  
  If the charges for the taxable service have been received in advance prior to rendering of the services, the Service Tax is payable even if the services are yet to be provided by them (Section 67 and Rule 6(1) of the STR, 1994).
19. Can service tax be paid by cheque?
- Yes, you can pay the service tax by cheque.
20. When paid by cheque, which date will be treated as date of payment?
- The date of deposit of cheque is the date of payment of Service Tax. If the cheque is dishonored, it would mean as if the Service Tax has not been paid and the relevant penal consequences would follow. (Rule 6(2) of the STR, 1994).
21. When payment is made by a client to an assessee after deducting his Income Tax liability under the Tax deduction at source (TDS) provision, whether the Service Tax liability of the assessee is only towards the amount actually received from that client or tax is to be paid on the amount including the Income Tax deducted at source also?
- Every person, liable to pay the service tax in accordance with the provisions of section 68 or rules made thereafter, who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest @13% per annum. Interest is payable for the period from the first day after the due date till the date of payment of any defaulted service Tax amount. Refer to Section 75 of the Finance Act, 1994.
22. Can interest be waived, and by whom?
- Interest payments are mandatory in nature and cannot be waived in ordinary jurisdiction.
23. What are the penal consequences if the Service Tax is not paid or paid late?
- A mandatory penalty, not less than Rs. 200 per day or @2% of such tax per month, whichever is higher, shall be imposed by the adjudicating authority. However, the penalty amount payable shall not exceed the amount of service tax payable.
24. Service Tax Returns
25. What are the Returns a service tax assessee has to file?
- ST-3 Return – For all the registered assessee, including input service distributors.
  
  ST – 3A Return – The assessee who is making provisional assessment under rule 6(4) of the service tax rules, 1994.
26. When to file returns?
- ST-3 Return is required to be filed twice in a financial year – half yearly. Return for half year ending 30th September and 31st March are required to be filed by 25th October and 25th April, respectively.
27. How to file Service Tax Returns?
- The details in respect of each month of the period for which the return is filed, should be furnished in the Form ST-3, separately. The instructions for filing return are mentioned in the Form itself. It should be accompanied by copies of all the GAR-7 (TR- 6) Challans for payment of Service Tax during the relevant period.
28. What is e-filing of Service Tax returns?
- E-filing is a facility for the electronic filing of Service tax returns by assessee from his office, residence or any other place of choice, through the Internet, by using a computer. The assessee can go to the e-filing site “Home page” by typing the address http://servicetaxefiling.nic.in in the address bar of the browser.
29. Where to file return?
- ST-3 or ST-3A is filed in triplicate to the Superintendent of Central Excise/Service Tax with whom the assessee has registered himself.
30. Is filing of return compulsory even if no taxable service provided or received or no payments received during a period (a particular half year)?
- Filing of return is compulsory, even if it may be a nil return, within the prescribed time limit, failing which penal action is attracted.
31. Whether a single Return is sufficient when an assessee provides more than one service?
- A single return is sufficient because the ST-3 Return is designed to capture details of each service.
32. Is there any penalty for non-filing or delayed filing of the Returns?
- If a person fails to furnish the ST-3 Return within the due date [25th October and 25th April every year] he shall be liable to penalty which may extend to an amount not exceeding Rs 2000/- depending upon Period of Delay.
33. Records
34. Is there any statutory documents required by the govt. such as specified invoice Performa, specified registers etc. for use by service providers.
- No specific records have been prescribed to be maintained by a Service Tax assessee. The records including computerized data, if any being maintained by an assessee as required under any other law in force. (E.g. Income Tax, Sales Tax) is acceptable to the Central Excise Department for the purpose of Service tax.
35. From where do the Service Tax assessee get the forms viz. ST-1, Service Tax-2 etc.?
- The Forms are available on the websites as well as with the jurisdictional Central Excise Commissionerates.
36. Can the department ask for more information than what assessee is submitting to it in the Form ST-1 and ST-3?
- Yes, if required the Department can always ask for additional information.
37. What is the preservation period for service tax records and documents?
- All records and documents concerning any taxable service, CENVAT, transactions etc. must be preserved for a minimum period of 5 preceding financial years.
38. Refund
39. Is the Service Tax payable by the assessee even in cases where his clients do not pay for the service rendered or pay only a part of the bill raised in this regard?
- The Service Tax is required to be paid only on the value of taxable service received in a particular month or quarter as the case may be and not on the gross amount billed to the client. However, in all such cases where the amount received is less than the gross amount charged/billed to the client, the Service tax assessee are required to amend the bills either by rectifying the existing bill or by issuing a revised bill and by properly endorsing such charge in the billed amount. In case an assessee fails to do so, his liability to pay Service Tax shall be on the amount billed by him to the client for the services rendered.
40. What is the procedure for claiming refund?
- The procedure for claiming refund for the amount due from the Department is as mentioned below:-
  
  i. Submission of application in prescribed Form-R in triplicate to the jurisdictional Assistant Commissioner.
  
  ii. Application should be filed within the prescribed period, i.e. before the expiry of six months from the relevant date as defined in Section 11B of the Central Excise Act, 1944 which has been made applicable to service tax refund matters also.
  
  iii. Application should be accompanied by documentary evidence to establish that the amount claimed as refund is amount paid by him in excess of the service tax due and the incidence of such tax has not been passed on to any other person.
41. What is the “Relevant Date” for calculation of limitation period of six months in respect of filing refund claims related to Service Tax?
- The “Relevant Date” for the purpose of refund (under section 11B of CEA, 1944) is date of payment of Service Tax. Thus, the limitation period of six months is to be calculated from the said date.
42. To claim the refund arising out of service tax paid under section 66A, no Performa is prescribed in the notification, how to claim it?
- In the notification, there is no difference in treatment of service tax paid under section 66 and section 66A of Finance Act, 1994. Where refund arises, Table –A, in Form A-2 can be used for making a refund claim.
43. Whether proportionate amount of service tax paid on shared services that have not been refunded after applying the formula, shall be available for the DTA units of the entity as CENVAT credit?
- Yes. Available
44. Whether consolidated refund claim under 17/2011 ST can be filed by an entity having more than one SEZ unit and a centralized service tax registration?
- If an entity is having multiple SEZ units with a centralized service tax registration, consolidated refund claim can be filed, provided separate accounts are maintained for receipt and use of services for the authorized operations in SEZ unit.
45. Whether certified copies of invoices can be used for claiming refund, if originals are needed for other statutory purpose; whether on the basis of single invoice, one can claim proportionate refund for SEZ Unit and balance as CENVAT credit?
- In terms of the notification, original invoices are needed for claiming refund; after receiving the refund, originals can be taken back on submission of copies certified by Chartered Accountant. On a single invoice, if proportionate refund (by SEZ Unit) and cenvat credit (by DTA Unit) needs to be obtained, then also similar system shall be followed.
46. Exemptions
47. What are the exemptions available for small service providers?
- Service Tax is fully exempted in respect of the taxable services of aggregate value not exceeding ten lakh rupees in any financial year. w.e.f 1-4-2008.
  
  The above mentioned exemption based on the turnover is not available to the persons who are liable to pay Service Tax but are not the service providers. For example:
  - The recipient of services from an overseas service provider who has no registered office in India.
  - A company incurring the Transportation charges for availing the services from Goods Transport Agencies, for transportation of goods by Road.
  This exemption was introduced with effect from 01.04.2005. (Notification No. 6/2005-ST, dated 01.03.2005).
48. What are the conditions to avail the exemption from Service Tax by the small scale service providers?
- Some of the important conditions for availing the exemption are as follows:
  - If the aggregate value of taxable services rendered by the service provider from one or more premises exceeds rupees eight lakh in the preceding financial year, the service provider is not eligible for the exemption for the current year.
  - The exemption shall apply to the aggregate value of all taxable services and from all premises and not separately for each premise or each service.
  - The benefit of the exemption shall not apply to taxable services rendered by a person under a brand name or trade name whether registered or not, of another person.
  - The exemption shall not apply to persons who are other than the service providers, but liable to pay Service Tax under section 68 (2) of the Act.
  - The provider of the taxable service shall avail the CENVAT credit only on such inputs or input services received, on or after the date on which the service provider starts paying Service Tax, and used for the provision of taxable services for which Service Tax is payable.
  - CENVAT Credit of Service Tax paid on any input services, under Rule (3) or Rule (13) of the CENVAT Credit Rules 2004, used for providing the services under the above exemption, is not admissible for persons availing the above exemption.
  - CENVAT Credit under Rule (3) of the said Rules, is not admissible on the capital goods which are received in the premises of the service provider during the exemption period.
  - An amount equivalent to the CENVAT Credit taken, if any, in respect of the inputs lying in stock or in process as on the date on which the provider of taxable service starts availing the exemption should be paid; the balance credit amount, if any, shall lapse.
49. Is there any exemption from payment of Service Tax if the receiver/provider of the service is the Central/State Government organization and Public Sector Undertakings?
- - No. There is no such exemption. All service providers, including the Central/State Government Organizations and the Public sector undertakings rendering the specified taxable service, are liable to pay Service Tax.
  - If a Government Department (sovereign)/public authorities performs any mandatory or statutory function under the provisions of any law and collect any fees, such activity shall be treated as activity purely in public interest and will not be taxable.
  - If such authority performs a service, which is not in the nature of statutory activity, for a consideration, the same shall be taxable.
  However, the taxable services provided by a Banking company or a financial institution including a non banking financial company, or any other body corporate or any other person, to the Government of India or the Government of a State, in relation to collection of any duties or taxes levied by the Government of India or the Government of a State, are exempted from the payment of Service Tax. (Notification No. 13/2004-ST, dated 10.09.2004).
50. How to determine the aggregate value of Rs. 10 lakh under small scale exemption notification?
- The aggregate taxable value means the sum of total of first consecutive payments received during financial year towards gross amount, as prescribed under Section 67 of F.A.1994 towards the taxable services.
51. Penalties
52. What are the penal provisions for various contraventions of the Service Tax Law?
- The penal provisions for various contraventions of the service tax law as follows:-
  - A person, who fails to take registration within the time stipulated shall be liable to pay penalty which may extend to Rs. 5,000/- or Rs. 200/- per day after the due date, whichever is higher. The provisions says, a person fails to “take” registration, whereas it should have been fail to “apply” registration, as some time the Department take it own time to grant the registration as recognized by the Board in its instruction Dy. No.294/Com(ST)/2007 dated 03.09.2007.
  - A person Nonpayment or delayed payment of service tax – A mandatory penalty, not less than Rs. 200 per day or @2% of such tax per month, whichever is higher, shall be imposed by the adjudicating authority. However, the penalty amount payable shall not exceed the amount of service tax payable.
  - A person fails to furnish the ST-3 Return within the due date [25th October and 25th April every year] he shall be liable to penalty which may extend to an amount not exceeding Rs 2000/- depending upon Period of Delay
  - A person, who fails to keep, maintain or retain books of account and other documents as required in accordance with service tax law, shall be liable to pay penalty which may extend to Rs. 5,000/-.
  - A person, who fails to furnish information, produced documents, when called by an officer or fails to appear before the Central Excise Officer when issued summon, shall be liable to a penalty which may extend to Rs. 5000/- or Rs. 200/- per day after the due date, whichever is higher.
  - A person, who fails to pay tax electronically, through internet banking, shall be liable to pay penalty which may extend to Rs. 5,000/-.
  - A person, who issues invoice incorrect or with incomplete details for fails to account for an invoice in his books of account, shall be liable to pay penalty which may extend to Rs. 5,000/-.
  - Suppression of the value of taxable services: Penalty to an extent ranging from 100% to 200% of the Service Tax which was not levied or paid or erroneously refunded, can be imposed on any person, if such short levy or short payment or erroneous refund is by reason of fraud collusion, willful mis-statement, suppression of facts; or contravention of the Act or the rules made there under with an intent to evade payment of Service Tax. Such liability towards penalty would be in addition to the Service Tax amount evaded or erroneously refunded and the interest thereon.
53. Is there any provision to waive the penalty under Service Tax law?
- The penal provisions under Service Tax are provided under Sections 76, 77 and 78 of Finance Act, 1994. Although the penalty is liable to be imposed for the circumstances covered under the said provisions, the Section 80 of the Finance Act, 1994, provides provisions not to impose penalty, for any failure referred to in the said provisions, if the Service Tax assessee proves that there was sufficient cause for such failure. Lack of funds or time is not construed as ‘sufficient cause’.
54. Why show cause notices are issued by the Department?
- When any amount is demanded as service tax or other dues from any person under the Finance Act, 1994 and rules made there under and/or any person is liable to penalty under the said Act/Rules, notices are issued in the interest of natural justice to enable such person to understand the charges and defend his case before an adjudicating officer.
55. Can show cause notice be waived?
- Where any service tax has not been levied or paid or has been short-levied or short paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him and inform the Central Excise Officer of such payment in writing. In such a case show cause notice will not be issued.
56. APPELLATE REMEDIES
57. Who should be approached when an assessee is aggrieved by an order of Assistant Commissioner/Deputy Commissioner in respect of Service Tax?
- An assessee aggrieved by the order of Assistant Commissioner/Deputy Commissioner in respect of Service Tax, may file an appeal to the Commissioner of Central Excise (Appeals) in Form ST-4, in duplicate along with a copy of order appealed against. The appeal should be presented within three months from the date of receipt of the decision or order of the Central Excise Officer.
58. What is the procedure for filing of appeal against the order of Assistant Commissioner/Deputy Commissioner of Central Excise?
- Any person aggrieved by any order passed by any assessing officer or adjudicating authority below the rank of Commissioner may file an appeal before the Commissioner, Central Excise (Appeals).
  
  i.The appeal shall be filed in the prescribed Form ST-4
  
  ii.It shall be presented within three months from the date of receipt of order which is being appeal against.
  
  iii.It should be filed in duplicate.
  
  iv.It should be accompanied by a copy of the order appealed against.
59. Can the time limit of three months for filing the appeal to the Commissioner (Appeal) be extended, if yes, under what circumstances?
- Yes, if the Commissioner of Central Excise (Appeals) is satisfied that the appellant was prevented by sufficient cause, from presenting the appeal within the statutory period of three months, he may allow the appeal to be presented within a further period of three months.
60. Can an appeal be filed against the order of Commissioner of Central Excise or Commissioner of Central Excise (Appeals)?
- Yes, the law provides for filing an appeal against the order of Commissioner of Central Excise or Commissioner (Appeals). Such appeals can be filed with the CESTAT within them three months of the date of receipt of the order sought to be appealed against.
61. What is the procedure for filing appeal against the order of Commissioner of Central Excise or Commissioner (Appeals)?
- i.Any assessee aggrieved by the Commissioner of Central Excise or the Commissioner (Appeals) may file an appeal before the Appellate Tribunal i.e. CESTAT.
  
  ii.The appeal should be filed within three months from the date of receipt of the order appealed against.
  
  iii.It should be filed in the prescribed from ST-5.
  
  iv. It shall be filed in quadruplicate.
  
  v.It should be accompanied by a copy of the order appealed against, one of which should be a certified copy.
  
  vi.The appeal should be accompanied by a fee of Rs. Two hundred only.
62. SERVICE TAX CREDIT SCHEME
63. Whether credit of Service Tax is available for all the input services used? If so what are the records to be maintained?
- Yes, An output service provider is allowed to avail Service Tax credit of the Service Tax paid on all input services in the following manner, namely:-
  
  i. Where the input service falls in the same category of taxable services as that of output service, Service tax credit shall be allowed to be taken on such input service for which invoice or bill or challan is issued on or after the sixteenth day of August, 2002.
  
  ii. In any other case, Service Tax credit shall be allowed to be taken on such input service for which invoice or bill or challan is issued on or after the fourteenth day of May, 2003;
  
  The invoice or bill or challans as the case may be shall contain the following details:-
  
  i. Serial number of the document
  
  ii. Date of issue.
  
  iii. Description and value of input service.
  
  iv. Amount of Service Tax paid
  
  v. Service Tax Registration No.
  
  vi.Address of Input Service provider.
64. Is there any prescribed document/register for availing Input Service Credit?
- The out service provider availing service tax credit shall maintain proper records in which the relevant information regarding the SI. No. and date of document on which Service Tax credit is availed, Service tax registration no. and name of the input service provider, description and value of input service, service tax credit availed, service tax credit utilized for payment of service tax on output service shall be recorded. The burden of proof regarding the admissibility of Service tax credit shall lie upon the person taking such credit.
65. How to avail Service Tax credit?
- The output service provider to avail Service Tax credit shall submit to the Superintendent of Central Excise, a return in the form annexed to the Service Tax credit Rules, 2003 along with Form ST-3.
66. Whether Input credit can be accumulated and adjusted at the time of payment of Service Tax?
- Service tax credit availed on input service may be utilized for payment of Service Tax on output service. Since no refund of any excess credit available is admissible, the assessee has to utilize the same on payment of Service tax.While paying Service Tax on the output service, the service tax credit shall be utilized only to the extent such credit is available on the last date of the month for payment of Service Tax relating to the month or in case where the assessee is an individual or proprietary or partnership firm to the extent the credit is available on the last day of the quarter for payment of Service Tax relating to the quarter.
67. How does the service provider operate within the scheme of service tax credit when he is providing both taxable and non taxable or exempt services?
- Where a service provider avails credit on any input service and renders such output services which are chargeable to service tax as well as exempted services or non taxable services, as the case may be, then the service provider shall maintain separate accounts for receipt and consumption of input service meant for consumption in relation to rendering of output services which are chargeable to service tax and the inputs service meant for consumption in relation to rendering of output services which are exempted services or non-taxable services, as the case may be. The service provider shall take credit only on that portion of input service, which is intended for use in relation to rendering output services, which are chargeable to service tax.
  
  In case the service provider, opts not to maintain separate accounts of input service meant for consumption in relation to rendering of such output services which are chargeable to service tax as well as exempted services or non-taxable services, he shall be allowed to utilize service tax credit for payment of service tax on any output service only to the extent of an amount not exceeding thirty-five percent of the amount of service tax payable on such output service.
68. What happens to the Service Tax credit lying unutilized in the account of an assessee when he shifts his establishment to another site or his establishment is transferred on account of change in ownership or on account of sale, merger, lease or transfer of such establishment?
- The output service provider is allowed to transfer the service tax credit lying unutilized in his account to such transferred sold, merged or amalgamated establishment.
69. What is the provision regarding Service Tax credit on the service provided in relations to telephone connection?
- Service tax credit on the service provided in relation to the telephone connection is allowed only in respect of such telephone connections which are installed in the business premises from where output services is provided. Mobile phones are not covered.
70. MAINTENANCE AND REPAIR SERVICE
71. In case of maintenance contract entered prior to March, 2003 for one year on receipt of the service charges for the whole year, it appears illogical to demand collect service tax on the services rendered prior to 14.05.2003 as the client has already paid the amount. Who will pay the service tax and how?
- There are cases where maintenance contracts are entered into for a period of more than one year. Vide Notification no.11/2003 Service Tax dt.20.06.2003, for maintenance contracts entered into prior to 1st July 2003, exemption has been provided to that part of the value of service for which bill/invoices have been raised and the amount has actually been received prior to the 1st July, 2003. For such contracts, all subsequent payments or payments made against invoice raised subsequent to the 1st July,. 2003 will be chargeable to service tax.
72. Whether service tax is applicable on maintenance and repair services provided by persons other than authorized service centers of companies?
- “Maintenance or repair” means any service provided by:-
  
  i. Any person under a maintenance contract or agreement ; or
  
  ii. A manufacturer or any person authorized by him in relation to maintenance or repair or servicing of any goods or equipment, excluding motor vehicle. Therefore, service tax is applicable on maintenance and repair services provided by all such persons.
73. If there is a total sub-contract of the service, whether sub-contractor is supposed to take out a registration and discharge the tax liability?
- The sub-contractor need not take a registration under service tax. In all such cases, service tax is to be paid by main service provider.
74. Whether maintenance and repair provided without any contract is taxable?
- The maintenance or repair service undertaken under a maintenance contract or agreement is only chargeable to Service tax.
75. Whether Annual Maintenance contracts (AMC) for maintenance of roads are excluded from service tax?
- As road is neither goods nor equipments, the AMC for roads would not be covered under service tax.
76. Whether service tax on maintenance and repair would be charged in cases where during the guarantee period, the services are provided to the buyer of the goods while the payments for the same are received from the supplier of the goods?
- Irrespective of the fact that the receiver of the service is different from the person making payments for such services, the service tax is leviable on the service provided towards maintenance and repair.
  
  Therefore, for the services provided during the warranty period by the dealer or any other authorized person.
  
  Service Tax would also be leviable on any amount received by such dealer or such other authorized person from manufacturer of such goods.
77. Maintenance or repair services rendered under contracts entered into prior to 01.07.2003 are exempted from service tax if the bills are raised, and payment also made, prior to 01.07.2003. Whether service tax would still be chargeable in cases where through the bills are raised or payment made, after 01.07.2003 but services were rendered prior to 01.07.2003?
- It is a cardinal principle of taxation that no tax can be levied or collected except by authority of law. Thus, if the levy of service tax on a particular service comes into force on given date, that service will not be taxable if rendered before that date. The levy of Service Tax on “Maintenance or Repair Service” has come into force on 01.07.2003. Accordingly, any maintenance or repair service rendered prior to 01.07.2003 will not be taxable, irrespective of when the bills are raised or payment made. This will apply to other services as well which were rendered prior to the imposition of service tax on them.
78. BANKING AND FINANCIAL SERVICE
79. Whether Finance Companies providing banking and financial services and having proprietary/partnership status are liable to service tax?
- The Banking and Financial services provided by a banking company or a financial institution including a non banking financial company or any other body corporate are chargeable to service tax. The term body corporate means a private limited public limited company or a government company. Such companies should be either a banking company or a financial institution or non banking financial company to come under the tax net. In other words individual’s proprietorship or partnership firms will not come under the tax net.
80. Whether buying and selling of foreign exchange by the authorized dealers and money changers are under service tax net?
- Only the service of “Foreign Exchange Broking” when provided by the foreign exchange brokers, authorized dealers and money changers has been brought under tax net.
81. ARCHITECT/INTERIOR DECORATOR SERVICE
82. Whether Vaastu/Feng Shui Consultants come under the category of Interior Decorators?
- Interior Decorator means any person engaged whether directly or indirectly, in the business providing by way of advice, consultancy, technical assistance or in any other manner services related to planning, design, or be antifriction of spaces, whether man made or otherwise.
  
  Since Vaastu/Feng Shui Consultants are offering services by way of advice relating planning and designing of spaces, they come under the category of Interior Decorators.
83. SOUND RECORDING SERVICES
84. Whether lending/hiring of Video/Sound Recording equipment come under service tax?
- The lending/hiring of Video/Sound Recording equipment is in the nature of sub-contracts and because the sub-contractors are not providing the services to the customer directly, they are not required to pay the service tax.
85. ADVERTISING AGENCIES
86. Can Cinema theatres be treated as advertisement agencies as they project advertisement?
- The Cinema theatres cannot be treated as advertisement agencies as they project advertisements only on behest of advertising agencies. Further it has already been clarified that the amount paid by advertising agency for space and time in getting the advertisement published in print media( i.e. newspapers, periodicals etc.) or the electronic media (Doordarshan, Private, T.V Channels, AIR, Cinema Theatres etc.) will not be includible in the value of taxable service for the purpose of levy service tax etc.
87. CARGO HANDLING SERVICE
88. Whether the services in the form of supply of provisions called “ship stores” provided by Ship chandlers to the vessels are taxable?
- The services rendered by Ship Chandlers are services rendered in relation to the vessel under authorization from port authorities and hence come within the ambit of port services and liable to service tax.
89. Whether storage of empty containers attracts levy of service tax?
- The handling/storage and warehousing of empty containers would be covered within the scope of storage and warehousing services and liable for service tax.
90. Whether handling/storage of empty containers within a port area would attract service tax?
- The handling/storage of empty containers within a port area would be covered within the scope of port services, as empty containers would come under the definition of goods under Section 65(41) of the Finance Act, 1994.
  
  The earlier clarification regarding not to consider empty containers as cargo in the context of Cargo Handling services has got no relevance vis-à-vis services.
91. MANDAP KEEPER
92. Whether the services provided by a Mandap keeper from a religious place are liable for service tax?
- The services provided by a Mandap Keeper from the precincts of a religious place are exempted from payment of service tax.
93. BUSINESS AUXILIARY SERVICES
94. Whether services provided by call centers are taxable?
- Business auxiliary services provided by call centers, i.e. Commercial Centers which provide assistance, help or information’s, through telephone, on behalf of another person are exempted from service tax.
95. Whether services provided by medical transcription centers are taxable?
- Business auxiliary services provided by medical transcription centers i.e. commercial concerns which transcribes medical history, treatment, medical observations and like are exempted from payment of service tax.
96. FRANCHISE SERVICE
97. What is the taxable service under Franchise Service?
- Franchise Service is a service provided by franchisor to a franchisee under a specific type of agreement knows as franchise agreement. This agreement includes the franchise being obliged to follow the concept of business operation, managerial expertise, market techniques etc. of franchisor and is under an obligation not to engage in selling, producing or providing similar goods or services, identified with any other person.The franchisee is required to pay to the franchisor, directly or indirectly, a fee which is chargeable to service tax.
98. If the franchisor is not normally resident of India, who has to pay service tax?
- As per service tax rules in all such cases the service receiver in India would be liable to pay service tax on behalf of the service provider.
99. COMMISSIONING AND INSTALLATION SERVICE
100. Whether commissioning or installation services provided by an individual would be taxable?
- Exemption from payment of service tax has been provided for commissioning or installation services provided by a commissioning or installation agency other than commercial concern.
  
  Accordingly, the commissioning or installation services provided by an individual will be exempt from service tax.
101. GENERAL
102. Whether the services provided by a Commissioner Agent are taxable?
- A Commissioner Agent is a person who causes sale or purchase of goods on behalf of another person for a consideration which is based on quantum of such sale or purchase.Business auxiliary services provided by a Commission Agent are exempted from payment of service tax.
103. Whether cost of material is also included in the value of taxable service?
- The cost of goods and materials sold by the service provider to the recipient is excluded from the value of taxable service.This exemption would be available only in cases where the sale of such goods is evidenced and the sale value is quantified and shown separately in the invoice.
104. Whether the rental charged by the Telephone service providers in their bills is taxable?
- The rental charges are included in computing the value of taxable services provided by Telephone service providers. Thus, service tax applies to call charges, including rentals.
105. EXPORT OF SERVICES
106. Whether export of services is exempted from service tax? If so, what would constitute exports? Whether secondary service providers supplying service to primary service providers are exempted from service tax if the primary service is exported?
- The service tax is leviable only on the taxable services supplied within India except Jammu and Kashmir. Thus all the taxable services exported outside India are not leviable to service tax and therefore; exempt. Since tax is a destination based consumption tax and, therefore, if the service provided are consumed abroad, it is covered under export and therefore, not leviable to service tax. Some of the examples are that if a Management Consultant or a Consulting Engineer provides the consultancy service to a foreign company situated outside India, it will constitute direct export. Similarly, if service provider in India deputes his consultant abroad or provides the service to foreign customer abroad by opening a branch office or any other establishment in that country, same would also constitute exports. However, where a foreign company comes to India and takes the services of manpower recruitment agency in India for recruitment of personnel, the service tax will be leviable as it does not amount to export. Similarly, foreign tourist coming to India and enjoying taxable services (even though making payment in foreign currency) are taxable and are not exempt as it does not amount to export.
  
  The secondary services, which are consumed or merged, with the primary output services, which are eventually exported outside India, will be exempt.
107. ACES - General
108. How can I file the statutory returns using ACES (Automation of Central Excise and Service tax) application?
- Assesses registered with ACES application and with department (Central Excise/Service Tax) can access the online facility to file returns that match their profile (ER-1 / ER-3 / ER-4 / ER-5 / ER-6 / Dealer return OR ST-3) and submit the same to the system.
109. What are the various returns i can file online?
- The various types of returns that can be filed online are as follows :-
  
  Type of Return
  - ER1– Monthly periodicity- Due by 10th of succeeding month-to be filed by Manufacturers of Central Excise, other than those who are required or entitled to file ER-2 or ER-3 returns
  - ER2-Monthly periodicity- Due by 10th of succeeding month-to be filed by Manufacturers who are 100% EOUs(Export Oriented Units) and are removing goods into the domestic tariff area
  - ER3-Quarterly periodicity-Due by 20th of the quarter- to be filed by Manufacturers availing exemption on the basis of value of their annual clearance, manufacturer of processed yarn, unprocessed fabrics falling under chapters 50 through 55,58 or 60 of the Central Excise Tariff or manufacturers of readymade garments.
  - ER4– Yearly periodicity- Due by 30th November-to be filed by manufacturers who paid duty of excise more than Rs.1 crore in the preceding financial year.
  - ER5-Yearly periodicty- Due by 30th April- to be filed by manufacturers who paid duty of excise more than Rs. One crore in the preceding financial year
  - ER6-Monthly periodicity- Due by 10th of succeeding month-to be filed by manufacturers who paid duty of excise in excess of Rs.1 crore in the preceding financial year.
  - ST-3– Half Yearly periodicity-Due by 25th April/25th October- to be filed by Service Tax assessees
110. How can I file my returns through ACES?
- You can file your returns online after logging into ACES using your user-id and password. You can also prepare your return off-line using Excel Downloadable Utility and then upload the .XML file so generated.
111. FAQs on filing of returns using web-form (on-line)
112. In case of disruption while entering my return, is it possible for me to retrieve the entered details and complete the return at a later point of time or Is it necessary that I have to fill and file the return at one go?
- In case of Central Excise Returns (ER-1), the return will get partially saved in case of disconnection (there is no explicit save button for partial save). The return partially saved can be retrieved and completed using Complete return option available in RET menu.
  In case of ST-3, there is a provision to save the return explicitly (before submission). The returns can be completed partially/fully using Amend return option in RET menu.

113. How to navigate between fields/pages on the screen?

Navigation would be as follows:
(i) Moving across fields: After entry in the desired field, tab key can be used. On pressing tab, you will be taken to next field of the section for data entry.
(ii) Moving across pages: After you have filled the data in a page, you can move to the next page by clicking ->Next button. On clicking this button, the system will validate all the entries on the page and lead you to the next sheet (if the data is filled properly on the page or when you want to proceed despite warnings in case of minor errors). Similarly, Previous button can be used for moving to a previous page for the purpose of view or correction.

114. How to fill up the data in e-return?

a) All the fields marked with asterisk (*) are mandatory and the same are to be filled before proceeding further.
b) Wherever required, data must be in correct format. For example
	(i) Challan no to be a 20 digit number consisting of, 7 digit BSR code, 8 digit date of tender in the format ddmmyyyy and 5 digit challan no. For example 12345670112200812345
	(ii) Wherever columns are available for providing Quantity, decimals up to two places only are allowed.
	(iii) Columns where Amount is to be provided, only whole number is allowed.

115. When should the check box for NIL Return be used ?
- When an assessee does not have any stock of excisable finished goods, any PLA/CENVAT credit balance, when during a month, there is no manufacture and clearance of any excisable goods etc. i.e. when there is nothing to declare to the department for the month, this can be used. Once the NIL return check box is checked, after providing the year and month of the return, the system will take you to the last screen of the return to fill in the details like place etc. and submit the return with the self assessment memorandum.
116. I have an opening balance of Rs.65, 000 in PLA, now I have utilized Rs.55, 000 for some payment under Other Payments - Arrears. But the system is asking me to enter the Challan No., Date and BSR Code against this entry in the Other Payments, and also it is expecting me to enter the challan number even though the payment is through Account current and not Credit Account. Please clarify.
- If the Assessee is paying through Account Current he has to enter the Challan No, Date and BSR Code which are mandatory fields. If the Assessee has an opening balance in that case he will have to mention the previous Challan details.
117. How to enter multiple Challans in ER-1/ ER-3?
- Multiple Challans can be entered in the last section (Challan Details) of ER-1/ ER-3.

118. While filling return an error message is displayed by the system, what should I do?

Error messages are categorized into two categories: Show stopper and Warning.
	(i) Show stoppers: These are major errors and you cannot proceed without correcting them e.g. Mandatory field such as month of the return is left blank or when CETSH entered is wrong.
	(ii) Warnings: These are minor errors. If you are sure that the entered data is correct, you can proceed with these errors. For e.g. calculated duty payable not matching with the duty payable as mentioned in the return.

119. What are the comments in red at the top of the confirmation page for my return?
- The comments in red at the top of the confirmation page shows the errors found in the Return. These issues can be corrected by assessee by modifying the return details before submission.
120. What if I am not able to correct the issues as highlighted in the last page of the return?
- If you do not correct the issues marked in red, then these returns with errors like Challan Number mentioned does not exist in the database or Provisional Assessment Order No. is not valid etc. are marked for Review & Correction process. Such returns (ER-1, ER-2 and ER-3 only) are marked to Range Superintendent, who will review the return and correct the errors found in the return after due consultation with you (assessee).
121. In Dealer Return, after completing all information and clicking on Next button, an error message appears “MONTH YEAR WHICH YOU ARE FILING RETURN, RECORD ALREADY EXISTS?” Please help.
- This error will occur if the user has already submitted the Return for the mentioned month and year. In ACES, once user has submitted return for a particular month and year, he will not be able to submit the return again for the same month and year.
122. How will I know if I have filled my returns correctly?
- In ACES you can view and verify the return submitted by you using
  RET–> List Original Return (in case of Central Excise)
  RET–> View ST-3 (in case of Service Tax)
123. How can I amend my ER-5? Can I amend this multiple times?
- You can amend your ER-5 return through RET –> Amend Returns –> ER5. You can amend ER-5 return multiple times latest by 30th November of current financial year for which ER-5 return was filed.
124. How do I amend my saved ST-3 Return?
- You can access saved ST-3 Return for amendment by clicking on Amend ST-3 option of Fill ST-3 submenu under RET menu. Once ST-3 Return is submitted in ACES the return cannot be amended.
125. How do I revise my ST-3 Return?
- You can revise your ST-3 return once within 90 days after filing the original return, by clicking on Revise ST-3 option of Fill ST-3 submenu under RET menu.
126. Will I get an acknowledgment after filing the return?
- On the successful submission of a return, an acknowledgement with a number in the format registration number_Type of return_Month and Year of the return will be shown. For example, for the ER-1 return filed for the month of December, 2009 by an assessee having registration no AAABC7865HXM001, the number AAABC7865HXM001_ER1_122009 is generated as acknowledgement. This number becomes a reference number (Source Document number) for subsequent correspondences with the department in respect of the return.
127. FAQs on filing of returns using EXCEL downloadable Utility

128. What are the pre-requisites for filling data in this utility?

Following are prerequisites for filing data in offline utility:
	1. The version of Microsoft Excel in your system should be Microsoft Office Excel 2003 and above
	2. Make sure that you have downloaded the latest Excel Utility from ACES website / application to your local system
	3. Please enable the Macros (if disabled) as per the following instructions:
		– On the Tools menu, point to Macro, and then click Security.
		– Click on either Medium or High to select the ‘Security Level’.
		– On the Trusted Publishers tab, select the Trust all installed add-ins and templates check box.
	Please make sure that your System Date is correct.

129. Do I need to download utility each time I file a return or use the earlier one downloaded?
- Yes, it is advisable that you download the latest version of utility from the ACES website before filling the same.

130. Give me an overview of offline utility for ER-1.

ER-1 is monthly return for production and removal of goods and other relevant particulars including CENVAT credit. The downloadable excel utility can be used for creating the XML file for e-filing of your return. This Utility is an Excel Workbook that consists of five worksheets and is dynamic.
E-filing consist of two sub process
	(i) firstly generation of xml file of the ER-1 Return, and
	(ii) Uploading of generated xml file to ACES application.

131. What is the Structure of the Excel workbook in the offline utility for ER-1?

Filling of ER-1 consists of following five worksheets initially: “Return”, “Paid”, “CENVAT”, “Other – Payments” and “Challan”. The name of each sheet is displayed in the tab at the bottom of the worksheet.”
(i) The sheets for entering duty payable data are added dynamically by the excel utility depending on the number of clearances entered. The sheets are named as “Payable (1)”, “Payable (2)” etc. The Utility will add new sheets for Payable dynamically when you enter data for production and clearance on sheet “Return”.
(i) The sheet for entering data for duty head wise breakup of arrears are also added dynamically e.g. “ARREAR (1)” ,”ARREAR (2)” etc.

132. What are the steps for filing Return through offline utility?

The steps are as follows:
	1. Fill up the Return data: Navigate to each field of every section in the sheet to provide applicable data in correct format. (Formats will get reflected while filling data.)
	2. Validating Sheets: Click on the ”Validate this sheet” button to ensure that the sheet has been properly filled and also data has been furnished in proper format. If there are some errors on the sheet, the Utility will prompt you about the same. In such cases, the offline utility will not allow you to proceed further until you rectify the errors.
	3. Generate XML: There is “Validate Return and Submit” button on last sheet “Challan” for validating all the entries in your return. If you click on this button, Utility will validate all the sheets one by one and also perform inter-sheet validations. After validation, an XML will be generated. In case there is some error identified on some sheet, the utility will prompt you about the same and lead you to the respective sheet(s).
	4. Both files are saved in the same folder of your system where Efiling Utility is placed/ saved (while downloading the e-filing utility).
	5. Upload XML file to ACES application: For uploading the XML generated by the E-filing Utility, login to ACES application and access menu option to upload generated xml file of Return. On Upload screen provide the required information and browse to select the relevant XML file and submit the form.

133. How do I file NIL return in offline utility?
- There is an Option for NIL Return in the first sheet. In case you are filing a NIL Return then change this option to “Yes”. On selection Yes, utility will ask you to freeze the option and then delete all the sheets that are not applicable.
134. How do I get the form as an LTU assessee in offline utility?
- There is an Option for LTU in the first sheet. If you are filing return as LTU (Large Tax Paying Unit) then change/ check/ tick the “Yes” option.

135. How do I fill up my ER-1 return using offline utility?

You can fill up your ER-1 return in the following manner:
	a. You can use ER-1 Excel Utility for filing the return of Present or Past months.
	b. All the Fields marked with asterisk (*) are mandatory. You have to provide data for these fields. If mandatory field is left empty, then Utility will not allow you to proceed further for generating XML.
	c. You are not allowed to enter data in the Grey Cells.
	d. Data provided must be in correct format, otherwise Utility will not allow you to proceed further for generating XML.
	e. Moving through the cells: After you have reached the desired cell, you can click on the tab keyboard button. On clicking tab, utility will take you to the next cell of the section for data entry.
	f. Moving through the sheets: After you have filled the data in a sheet you can move to the next sheet by clicking the “”Next”” button. On clicking this button utility will validate all the entries on the sheet and lead you to the next sheet if the data is filled properly on the sheet. In case there is some error in your sheet, the utility will prompt you the error messages and will not allow to proceed till these errors are corrected.
	g. Adding new rows:
		(i) Sections such as DETAILS OF THE MANUFACTURE, CLEARANCE AND DUTY PAYABLE allow you to enter as much data in a tabular form. You can Click on “Add Row” to add more rows.
		(ii) To add more than one row you must fill data in the mandatory fields of the previous row.
		(iii) If you have added a new row then Utility will add new “Payable” sheet for filling the details of duty payable.
	h. Delete Last row: Rows that has been added in section DETAILS OF RECEIPT AND CONSUMPTION OF PRINCIPAL INPUTS can be removed by clicking the button “Delete Last Row”. If you have deleted a row then respective Payable sheet will also get deleted. For e.g. If you have deleted second row then Payable (2) sheet will also be deleted.
	Note- while filling tabular data, you must fill the mandatory fields in the added rows also, otherwise Utility will not allow you to proceed further for generating XML.
	i. Filling data for Return” sheet:
		(i) Return Period: Enter the month and Year for which you are filing the return.
		(ii) Registration details: Enter Registration number and name and ensure that it is correct.
	j. Details of manufacture and clearance and duty payable:
		(i) Provide the details like CETSH, Unit of quantity etc.
		(ii) Please select the value for field CETSH No. from the dropdown very carefully. As you select the CETSH in the first row, the Utility will ask you to freeze the option and add new sheet for filling details of “Duty Payable”. The option once frozen cannot be changed.
		(iii) There is provision for adding new row in clearance details. For adding new row fill all the details in previous row and click on Add Row button. The utility will add new Payable sheet for every CETSH entered on Return sheet.
	k. Filling data for “Payable” sheet: Enter the details of duty payable like Duty Head, Notification Details, Rate of duty, Duty payable and Provisional Assessment Number (if any).
	l. Filling data for Paid sheet:
		(i) CLEARANCE DETAILS OF INTER UNIT TRANSFER UNDER SUBRULE (1) OF RULE 12BB and RECEIPT DETAILS OF INTERMEDIATE GOODS RECEIVED FROM OTHER PREMISES UNDER SUBRULE (1) OF RULE 12BB: These details are applicable for LTU users only.
		(ii) DETAILS OF DUTY PAID ON EXCISABLE GOODS: Enter the details of duty paid on excisable goods. Note that only those duty heads allowed here which are declared in Payable sheets.
		(iii) ABSTRACT OF ACCOUNT-CURRENT (CASH PAYMENT): All the fields are self-explanatory. Provide the details of cash payment made during the month.
	m. Filling data on CENVAT sheet: All the fields are self-explanatory. This is the sheet to enter the details of CENVAT credit taken and utilized during the month of filing the return.
	n. Other-Payments” Sheet: If some other payments were made during the month then provides the details on this sheet. The payment type may be “”ARREARS””,””INTEREST”” and “”MISCELLANEOUS””.”
		Please select the value for field Payment in SECTION ARREAR very carefully. As you select the option, the Utility will ask you to freeze the option and add new sheet for filling duty head wise breakup of Arrears. The option once frozen cannot be changed. If there is no payment made then you can leave this sheet blank and proceed to the next sheet.
	o. ARREAR” sheets: This sheet is added by the utility if Arrear payments details are filled on the sheet “Other-Payment”. Please provide the duty head wise breakup of payments made for arrears. There is provision for adding new row in Duty head wise breakup. For adding new row fill all the details in previous row and click on Add Row button.
	p. “Challan” sheet:
		(i) You can enter the details of challan, Invoice numbers, transfer challan details (if any), date and place. There is column for entering Remarks also which is optional.
		(ii) After filling all the sheets, click on the button “Validate Return & Submit” to generate XML of your Return.

136. In ST-3 Offline Utility when I enter premises code, an error appears “Premises code Number accepts only 10 digits alphanumeric characters?” Please help.
- Please ensure that you enter 10 characters premises code. System does not allow less than or more than 10 characters code. This code can be alphanumeric (all numeric, all alphabetic or alphanumeric). The structure of 10 characters premises code is [Location Code of 6 characters + 4 alphanumeric characters]. User can check the premises code through RET—> Fill ST-3 –> Fill (Check premises code here).

137. How to generate XML file after filling the sheets in the offline utility?

Once all relevant fields of the sheet have been filled up, clicking on “Validate Return and Submit” button will again validate all the sheets and XML will be generated if data is found OK.
1. After generating the XML, the Utility will prompt you the name and location of the files saved
2. The name of the XML file that has been generated by the system will be the Registration Number_Date_StampTime.xml e.g. AAABC7865HXM001_131200834021PM.xml or AAGPI2894EXD001_24-Jun-0910603PM.xml

138. How do I upload my offline return?
- You can browse and upload offline return (XML file) by logging into ACES with your user-id and password and navigating in the ACES website in the following manner:
  RET–> eFiling for Returns –>Upload File (In case of ER-3)
  RET–> eFiling–>Upload File (In case of ST-3)
139. What does the “status of returns”mean?
- Status of returns implies the status of offline returns uploaded into the system. Status of returns submitted through offline utility can be either Uploaded or Filed or Rejected. You can view the status of your return submitted using offline utility through:
  RET–> eFiling for Returns–> View Status (In case of CE)
  RET–> eFiling –> View Status (In case of ST)
140. When will I know whether my uploaded return is accepted or rejected by ACES?
- Returns submitted through offline utility can have follows status:
  – Uploaded: Denotes that return is uploaded and under processing by the system. You should view again after some time
  – Filed: Denotes that uploaded return is accepted by the system
  – Rejected: Denotes that the return could not be processed due to errors and is rejected and the assessee return is not filed with the department in this case
  The result of the acceptance or otherwise of the return filed off line will be known within one business day at present.
141. When are offline returns rejected?
- Returns would not be accepted due to some technical errors validated by the system. For example, such errors may be wrong mention of premise code, mismatch of registration numbers, mismatch of period of return filed etc.
142. What to do when my return is rejected?
- Errors due to which return is rejected are displayed when you click on hyperlink on rejected return. Please also look into the error the systems shows for the rejection of the return and correct the error. If required, returns can be corrected and then new xml file generated and uploaded again.
143. While uploading the XML file in ACES, an error appeared "File corrupt. Regenerate and upload the file again". Since regenerating the XML is time consuming task, please help how we can regenerate with less effort?
- This error appears only when user has tampered XML file generated by the utility. Please ensure that you upload the original XML file generated by the utility without tampering/opening for modification.
144. While clicking on "Validate & Submit" button on worksheet on eFiling Dealer Return, it says 'Compile error in hidden module: Module 5' and system does not generate the XML to be uploaded?
- This error will not occur if the user is using Microsoft Office Excel 2003 version or above.
145. FAQs on on-line Duty Payment
146. How I can pay duty online?
- You can pay your duty through e-payment option on ACES homepage provided you have net-banking account with any of the banks listed in the ACES website. The listed banks will be displayed in a separate page once you click on e-payment option in ACES homepage.
147. I tried paying the service tax through e-payment mode available in ACES homepage. However found that the organization details are not getting populated in the Form. Please clarify whether the server is linked to the ACES server?
- e-Payment link on ACES website only redirects the users to NSDL website to make e-payments and is only a facility provided for the ease of the assessee. In case any issues with the NSDL website, please contact the respective helpdesk mentioned in the concerned NSDL website.
148. FAQs on ST3 return
149. I got ST registration on/after 01.07.2012 with the service description, 'Other Than in the Negative List'. Can I file the return now?
- Assessees registered / amended their registration on or after 01.07.2012 with the service description, ”All Taxable Services – Other than in the Negative List’ are required to file amendment to their Registration online by deleting the said description and adding the relevant description(s) of Taxable Services available in the drop-down list in the online Amend ST1 Form. Only after approval of the amendment by departmental officers, these assessees will be able to file their returns for the period from July, 2012 onwards.
150. The ST-3 Return for the period, July-Sept., 2012 is quarterly or half-yearly?
- It is a quarterly return.
151. Is the new ST-3 return for the period, July-Sept., 2012 available in both online or offline modes?
- It is available in offline mode only as of now.
152. How to download the new Excel utility for ST3 return for the period July-Sept 2012?
- The new Excel utility for ST3 return for the period July-Sept 2012 can be downloaded from ‘DOWNLOADS’ section of ACES website, or after logging in, under the navigational path RET-> e-Filing -> Download eFiling Utility.
153. Are there any changes in the new format of ST-3 return for the period, July-Sept., 2012?
- Few modifications have been carried out to overcome the difficulties in entering certain details such as R & D Cess, Specific Rate of Tax etc.
154. Any new instructions as the ST-3 format are modified?
- Please go through the instruction sheet and guidelines given in the new excel utility, ‘What’s New’ and ‘Help’ sections of ACES Website. In case of doubts relating to offline utility or the ACES software application, you may e-mail to ACES Service Desk at aces.servicedesk@icegate.gov.in or call toll-free 1800 425 4251. For any other queries on legal/procedural matters, please contact your jurisdictional Central Excise or Service Tax office.
155. Are there any built in validations which may result in rejection of return?
- Yes. There are a few mandatory validations and if incorrect entries are made, the return would be rejected. Some of them are listed below.
  a) Registration Number does not exist in the database.
  b) If a non-LTU assessee selected ‘Yes’ in A6.1.
  c) Wrong selection of Constitution resulting in display of payable/paid sheet in quarterly format instead of monthly format and vice versa.
  d) Entering text in fields having drop-down values
  e) Technical Error – tampering of XML file generated before uploading, error at the time of generation of XML file etc.
156. A1 - What is to be selected?
- Only one of the options (ORIGINAL / REVISED) can be selected as applicable to the Assessee.
157. A2 - What to enter in this field?
- Digits PAN-based or Temp-based RC number should be entered.
158. A3 - Name of the Assessee, What is to be entered?
- This field is disabled for any entry by the assessee. Based on the registration number entered, the name will be fetched from the registration database of the assessee, when the XML file is uploaded, and it will be displayed when the return is viewed.
159. A4 & A5?
- As this return is meant for the specific period, July – Sept. 2012, this field is auto-populated by the system and need not be entered by the assessee
160. A6 - How to select the option?
- Assessees, falling under the jurisdiction of any Large Tax Payers’ Unit (LTU) must select ‘Yes’ in A6.1. A6.2 – ‘Name of LTU Opted for’ will be fetched from the registration database of the assessee, when the XML file is uploaded, and it will be reflected when the return is viewed.
161. A7 - How to find out Premises Code?
- This field need not be entered by the Assessee. This field will be fetched from the registration database of the assessee when the XML file is uploaded and it will be reflected when the return is viewed.
162. A8 - Constitution of the Assessee:
- There are more categories compared to the old version of form ST-3. The Assessee has to select the appropriate category applicable to them and as already furnished in form ST-1. When ‘Proprietorship/Individual’, ‘Limited Liability Partnership’ or ‘A Firm’ is selected in the ‘Constitution of the Assessee’ field system will display the ST3 return with payable/paid sheets in quarterly format and for other values of Constitution the payable/paid sheets in monthly format.
163. A9 - List of Taxable Services - How to select many services?
- To add more than one service, click on the ‘Add Service’ button. Similarly, if any service has been wrongly selected, it can be deleted by clicking on the ‘Red’ colour cell and then clicking on the ‘Delete Service’ button.
164. How to fill up Service wise details?
- When the taxable services applicable are selected, the service-wise payable screens will be populated and displayed for filling up the data.
165. A10 - Category of Registrant/ Partial Reverse Charge: What is Partial Reverse Charge?
- The details are available in the Notification No. 30/2012-ST dated 20-06-2012, effective from 01-07-2012, made applicable to certain specified services.
  Service Provider has to select A10.1
  Service Receiver has to select A10.2
  If the Assessee is liable to pay tax under Partial Reverse Charge as Provider, he will have to select ‘Yes’ under A10.1 and A10.3 and select the percentage from A10.4.
  If the Assessee is liable to pay tax under Partial Reverse Charge as Receiver, he will have to select ‘Yes’ under A10.2 and A10.4 and select the percentage from A10.6.
166. How to enter the details of exemptions, if any availed under particular Notification/s?
- For entering details of any exemption availed under a Notification and entering the amount of exemption claimed, the below mentioned steps have to be followed:
  a. A11.1 – This field should be selected as YES.
  b. A11.2 – After selecting YES in A11.1 this field will be enabled. A drop down list of Notification No’s / Sl. No will be enabled and displayed in A11.2, relevant for the selected service. The Assessee can select the Notification No. / Sl. No. to be availed by them. The assessee should select the Notifications and Sl.Nos. from the drop-down only and should not enter the numbers.
167. How to avail abatement?
- a. A12.1 – This field should be selected as YES
  b. A12.2 – After selecting YES in A12.1, this field will be enabled. A drop down list of Notification Nos / Sl No will be enabled and displayed in A12.2, relevant for the selected service. The Assessee can select the Notification No / Sl No availed by them. The assessee should select the Notifications and Sl.Nos. from the drop-down only and should not enter the numbers.
168. How to avail mega exemption notification?
- Gist of the mega exemption Notification No 25/2012 ST dated 20.06.2012, effective from 01.07.2012, is made available in the excel utility in the Instruction sheet. This contains the serial no and the description of various services covered therein.
169. How to fill up the details of Provisional Assessment, if any, in the return?
- In A13.1, when Yes is selected, A13.2 will be enabled to enter the Provisional Assessment order number and date.
170. What to fill up in B1.1 to B1.6?
- The text in the rows is self-explanatory and for further details, you may go through the Instruction sheet available in the notified statutory Form ST-3 Vide Boards Order No: 01/2013-Service Tax dated 06th March 2013. For any further clarification on these fields, the Jurisdictional SP/AC/DC may be approached.
171. How to fill up B1.8/B1.11?
- If the Assessee desires to fill up any amount in these fields, they should have selected the applicable Notifications from A11/A12. Otherwise B1.8/B1.11 cannot be filled.
172. How to claim other deductions in B1.12?
- For entering any amount in this field the Assessee should also fill up the details of such deductions claimed, in the text field provided there in. If this field is filled, the Return will be marked for R & C.
173. How to fill up B1.15 / B2.15, Service Tax Rate-wise Break up of NET TAXABLE VALUE for ADV rate?
- When various Tax Rates are filled up in this table against certain taxable value, the total of such rate-wise values should be equal to the NET TAXABLE VALUE arrived in B1.14. For further details, the illustrations pasted in ACES Website under HELP section, may please be referred.
  B1.15 / B2.15 are meant only for filling up ad valorem rates of Tax applicable only.
174. Is there any provision to enter specific rate of Tax?
- Yes. Table is available in B1.16 / B2.16 for entering details of services liable to specific rate of Tax. The rates applicable can be entered along with the taxable units chargeable to Tax in this table and the system will populate the Tax payable.
175. Is Cess payable on the Tax calculated under specific rate of tax?
- Yes. Educational Cess at 2% on the tax payable and Secondary higher education Cess at 1% on Tax payable has to be paid. If the Cess rates are entered by the Assessee, the system will populate the amount of EDU/SHE Cess payable under B1.20 and B1.21. Please also refer to the Illustration for entering Specific rate in ST3 return is given at the end.
176. What is R & D Cess deduction?
- In term of notification no 14/2012 ST dated 17.03.2012, it provides for exemption of R & D Cess payable on import of technology from the tax payable on the services provided.
177. How to fill up B2.1 to B2.21?
- This is similar to what is explained for Provider section from B1.1 to B1.21.
178. How to enter the value of services imported?
- This can be entered under B2.5.
179. How to fill up Partial Reverse Charge under B1.6 & B2.7?
- For filling up any amount in these fields, A10.3/A10.4 should have been selected as ‘Yes’ and A10.5/A10.6 should be enabled with the appropriate percentage, selected from the drop down list.
180. How do I fill up specific rate of Tax as a provider of 'Foreign Exchange Broker Service' / 'Lottery Ticket Selling Agents'?
- Specific illustrations are given for the said services and are available in ACES Website under ‘Help’ section.
181. What is meant by book adjustment in the case of specified Govt. Departments?
- This is meant for those Central Govt. Departments who are liable for service tax for the services provided by them but the payment of the same is effected by way of ‘adjustment of entries’ and not by Cash.
182. Where do we enter the advance amount of Tax deposited?
- They should be entered in the table under part ‘C’ meant for Service Tax payable in advance.
183. Can I enter the payment of Arrears by CENVAT adjustment?
- Yes. This amount can be entered in PART ‘G’.
184. What Challan details have to be entered in H1?
- If any payment of Cash / Cess / Other Payment have been made by cash all relevant challan nos. shall be entered in this table with their amounts.
185. How to enter details of multiple challans?
- Any number of challans can be entered by clicking the ‘Add Challan’ button in the Challan details section.
186. How to enter the amount of late fee paid for delayed filing of returns?
- A separate row no. G10 has been provided for this purpose.
187. What is the restriction for entering an amount in I3.1.2.6 / I3.2.2.6 / I3.3.2.6?
- If any amount is entered in these fields, the details of the same should be given in brief in the text field provided therein.
188. Can I add ISD as new category of registrant at the time of filling up the return?
- No. Such Assessee will have to file amendment application in ACES to add ISD as a category and only after that they have to file the return.
189. Can I enter EDU Cess and SHE Cess combined together in CENVAT section?
- No. Separate tables have been provided for entries of credit taken and utilized on EDU Cess & SHE Cess.
190. Is there provision to enter the details of Certified Facilitation Centre (CFC)?
- Yes. This has been provided under PART ‘L’ of the return.
191. How to calculate the late fee for delayed filing of the return?
- New provision has been made in ACES to identify the delayed filling of returns, no. of days of delay beyond the due date and the late fee payable. After the returns are successfully filed, these details will be populated and displayed in the view option for Assessee and departmental officers.
192. FAQ FOR ST3 RETURN FROM THE PERIOD OCT, 2012 - MAR, 2013 ONWARDS
193. The ST-3 Return for the period, Oct, 2012- Mar, 2013 is a quarterly or half-yearly?
- It is a half yearly return.
194. Is there any change in the Format of ST3 return for the return period Oct, 2012 -March, 2013 when compared to July - Sept, 2012 return?
- Yes. July – Sept, 2012 return was quarterly and Oct – March, 2013 is half yearly and accordingly the format is displayed in ACES.
195. What is the last date for filing return for the period Oct, 2012 - March, 2013?
- 31st August, 2013 is the last date for filing the return for Oct – Mar, 2013 period.
196. The ST-3 Return for the period, Oct, 2013- Mar, 2014 is a quarterly or half-yearly?
- It is a half yearly return.
197. What is the last date for filing return for the period Oct, 2013 - Mar, 2014?
- 25th April, 2014 is the last date for filing the return for Oct, 2013 – Mar, 2014 period.
198. Is the new ST-3 return for the period, Oct, 2013 - Mar, 2014 available in both online or offline modes?
- Yes, it is available in both offline and online format.
199. What are the different methods of filing ST3 return in ACES?
- a. You can file your returns online after logging into ACES www.aces.gov.in using your user-id and password.
  b. You can also prepare your return off-line using Excel Downloadable Utility and then uploading the XML file so generated.c. Return can also be field with the help of XML Schema, the third party software.
200. I got my Service Tax registration on or after 01.07.2012 with the service description 'Other Than in the Negative List'. Can I file the return now?
- Yes, returns can be filed. However, it is suggested that necessary amendment application should be filed for updating the Registration data. Assessees registered / amended their registration on or after 01.07.2012 with the service description ‘All Taxable Services – Other than in the Negative List’ are required to file amendment their Registration online by deleting the said description and adding the relevant description(s) of Taxable Services available in the drop-down list in the online Amend ST1 Form.
201. How can I file the ST3 return on-line?
- a. After logging into the ACES, click on the RET module displayed in the menu item at home page.
  b. Select Fill ST-3 to get the Form ST3 on the screen. Select the required option. Navigation path is Login as Assessee > RET> Fill ST-3> Fill.
  c. After filling all the details, in the last page, click on ‘Preview’ button.
  d. A confirmation view screen will display the return in its entirety. Verify the correctness of details entered. Once it is confirmed that the entered details are in order, click on ‘Submit’ button.
  e. If any modification is required, click on ‘Modify’ button. The first entry screen will be displayed. Modification can be carried out in all fields. If it is desired that the details are to be entered afresh, click on ‘Cancel’ button.
202. In case of disruption while entering my return, is it possible for me to retrieve the entered details and complete the return at a later point of time or is it necessary that I have to fill and file the return at one go?
- In the online version of ST-3 returns, in the event of disruption or loss of connectivity, there is auto save facility and the data entered in the return are automatically saved up to the page which have been saved by using the ‘Next’ button. But the data entered in a page, which has not been saved will be lost. If the user wishes to complete the return, the auto-saved returns can be retrieved, completed partially/fully using Complete ST3 option under RET> Fill ST3 > Complete ST3.
203. How to navigate between fields/pages on the screen?
- Navigation would be as follows:
  (i) Moving across fields: After entry in the desired field, tab key can be used. On pressing tab, you will be taken to the next field of the section for data entry.
  (ii) Moving across pages:
  a. After you have filled the data in a given page, you can move to the next page by clicking ‘Next’ button.
  b. Before moving to the next page, on clicking ‘Next’ button, the system will automatically validate all the entries of that page. If data is not correctly filled in, the errors in the page will be displayed.
  c. In case of mandatory validations, the user will be able to proceed only after the errors displayed, are rectified.
  d. In case of other minor errors, the user will be alerted about the errors and will be given an option to correct or to proceed without correcting the errors.
  e. When ‘Next’ button is clicked, the user will be taken to the next sheet.
  f. Similarly, ‘Previous’ button can be used for moving to previous page for the purpose of view or correction.
204. How to fill up the data in return?
- a. All the fields marked with asterisk (*) are mandatory and the same have to be filled in each sheet before proceeding further.
  b. Wherever required, data must be in correct format. For example, Challan No. should be a 20 digit number consisting of, 7 digit BSR Code, 8 digit date of tender in the format and 5 digit Sl.No. For example “12345670112200812345”.
  c. Only whole numbers should be entered in columns where Amount is to be entered
205. How to Add or Delete Rows in various screens?
- The procedure is as follows:
  (i) Adding new rows: Sections such as Taxable Services, Notification for Exemption / Abatement availed, Challan Details sections, Tax Rate Tables etc, allow the users to enter multiple rows of data in a tabular form. You can click on ‘Add’ button to add more rows. To add more than one row, you must have filled data in the mandatory fields of the previous row.
  (ii) Delete rows: Rows that have been added in the section can be removed by checking the ‘Select’ box (es) and clicking ‘Delete’. All rows cannot be deleted since at least a minimum of one row of details should be present.
206. While filling return an error message is displayed by the system, what should I do?
- While filling return an error message is displayed by the system, what should I do?
  Error messages are grouped into two categories: Mandatory validations and Warnings.
  (i) Mandatory validations: These are major errors and you cannot proceed without correcting them e.g. Period of the return is left blank or when both the Original or Revised options, are selected as Yes.
  (ii) Warnings: These are also major errors and should be corrected as per the error message. However, the system allows filing of the returns without correcting the errors. The returns containing these errors are marked for Review and correction by the departmental officers and they may contact the assessee for further clarification, information or documents to correct the errors.
207. What are the comments in red at the top of the confirmation page for my return while filing the return online?
- The comments in red at the top of the confirmation page shows the errors found in the Return. These issues should be corrected by assessee by modifying the return details before submission.
208. What if I am not able to correct the issues as highlighted in the last page of the return?
- If you do not correct the issues marked in red, then these returns with errors like ‘Challan Number mentioned does not exist in the database’ or ‘There is difference between Payable and Paid amount of Tax / Cess’ etc. are marked for Review & Correction process. The assessee can also view these errors and subsequently file a revised return to correct these errors.
209. How will I know if I have filed my returns correctly?
- In ACES you can view and verify the return submitted by you through RET-> View Original ST-3.
210. What is downloadable utility?
- Downloadable utility is an offline utility of ST3 return, which can be downloaded to your computer when the same is connected to the internet, but it can be filled in offline, without connecting to the internet. After filling in the relevant data, the xml should be generated. Thereafter, the computer should again be connected to the internet and the XMLfile of the return be uploaded on-line to ACES.
211. How to download the Excel utility for ST3 return for the period Oct, 2013 - Mar, 2014?
- The Excel utility for ST3 return for the period Oct, 2013 – Mar, 2014 is available for download at http://acesdownload.nic.in under the header Service Tax – Excel Utilities (For Filing ST-3 returns for Half Year Oct-Mar 2013 onwards). It can also be accessed from ‘DOWNLOADS’ section of ACES website http://www.aces.gov.in or after loggings in, through the navigational path RET-> e-Filing -> Download e-Filing Utility.
212. What are the pre-requisites for filling data in this utility?
- Following are prerequisites for filling data in the offline utility:
  a. The version of Microsoft Excel in your system should be Microsoft Office Excel 2003 and above.
  b. Make sure that you have downloaded the latest Excel Utility from ACES website / application to your computer, applicable for the return period for which you are filling the return.
  c. Please enable the Macros (if disabled) as per the following instructions:
  1. On the Tools menu, point to Macro, and then click Security.
  Click on either Medium or High to select the ‘Security Level’.
  
  On the Trusted Publishers tab, select the Trust all installed add-ins and templates check box.
  
  d. Please make sure that your computer system Date is correct.
  e. The Computer should have a file Compression software to unzip Excel Utility File.
213. Do I need to download utility each time I file a return or Can I use the earlier one downloaded?
- Yes. It is advisable that you download the latest version of utility from the ACES website before filling the same.
214. What are the steps for filing Return through offline utility?
- The steps are as follows:
  a. Fill up the Return data: Navigate to each field of every section in the sheet to provide applicable data in correct format. (Formats will get reflected while filling data.).
  b. Validating Sheets: Click on the ‘Validate this sheet’ button to ensure that the sheet has been properly filled and also data has been furnished in proper format. If there are some errors on the sheet, the Utility will prompt you about the same. In such cases, the offline utility will not allow you to proceed further until you rectify the errors.
  c. Generate XML: There is ‘Validate Return and Generate XML’ button on the last sheet for validating all the entries in your return. If you click on this button, Utility will validate all the sheets one by one and also perform inter-sheet validations. After validation, an XML file will be generated. In case there is some error identified on some sheet, the utility will prompt you about the same and lead you to the respective sheet(s).
  d. Both files are saved in the same folder of your system where Efiling Utility is placed/ saved (while downloading the e-filing utility).
  e. Upload XML file to ACES application: For uploading the XML generated by the E-filing Utility, login to ACES application and access menu option to upload generated xml file. On Upload screen provide the required information and browse to select the relevant XML file and submit the form.
215. How do I file NIL return in offline utility?
- There is no NIL Return filing option in the ST3 return. You have to fill up the mandatory fields, generate XML and upload it with the relevant details for the return period.
216. Where do I find the row wise guidance to fill up the return?
- The instructions for this are available in the Excel Utility under Instructions Section.
217. How to generate XML in the offline utility?
- a. After filling all the relevant fields in the return, click on the button ‘Validate Return and Generate XML’ to generate XML file.
  b. In case an error (mandatory validation or non-mandatory)is identified in some sheet which needs correction, the utility will prompt you about the same and will lead you to the respective sheet. If it is a mandatory validation, you will be able to generate the XML file only after correcting the error. If it is non-mandatory, the utility will list the errors and ask you before generating XML file: “Do you want to Submit Return and generate the XML with following errors” If you select Yes, then XML file will be generated with the filled-in data. For rectifying these errors, select answer as No.
  c. After generating the XML file, the utility will display the name of the XML file and the location where it has been saved. The name format of the XML file generated will be: RegistrationNumber_Date_Time.xml e.g. AAABC7865XSD001_31-Jul-1344016PM.xml
218. How do I upload my offline return?
- a. Login to ACES application and access RET -> e Filing -> Upload File to upload generated xml file of ST3 Return.
  b. On Upload screen, fill in all the required fields like Financial Year, Return for the period and Return Type.
  c. Click on ‘Browse’ to select the XML file, Save and then submit for uploading.
219. When will I know the status of the XML file uploaded?
- The result of the acceptance or otherwise of the XML file uploaded will be known in one business day.
220. How do I check the status of the uploaded XML file?
- The status of the uploaded XML file can be seen after logging into ACES through RET -> e Filing -> View XML Status.
221. What does the status of return mean?
- The Status of XML file implies the status of offline returns uploaded into the system and results thereof, which can be either Uploaded or Filed or Rejected
  1. Uploaded: Denotes that XML file of the return is uploaded and is under process. You should view again after some time.
  1. Filed: Denotes that uploaded return is accepted by the system.
  1. Rejected: Denotes that the return has been rejected due to some error(s) and the return is not considered as submitted to the department in such a case.
222. How to view the reason(s) for rejection of XML file uploaded?
- The reason(s)of rejection of the uploaded XML file can be viewed after logging into ACES through RET ->e Filing -> View XML Status. A hyperlink is provided on the Return No. by clicking on which, the reason(s)of rejection can be viewed.
223. What are the reasons for which XML file get rejected?
- There are a few mandatory validations as listed below and if incorrect entries are made, the return would be rejected:
  a. Incorrect selection of return type whether it is Original or Revised return.
  b. Incorrect Registration Number.
  c. If a non-LTU assessee selected as ‘Yes’ in ‘A6.1’ and vice versa.
  d. Wrong selection of Constitution.
  e. Incorrect category of Registrant.
  f. Incorrect Rates of Tax / EDU Cess / SHE Cess.
  g. Higher amount entered in Challan Details Section as against the actual amount deposited.
  h. Technical Error – Tampering of XML file generated before uploading, use of special characters in the return, error at the time of generation of XML file etc.
224. What to do when the XML file is rejected?
- When you click on the hyperlink on the rejected Return No., the reasons of rejection are displayed. Please correct the error(s) in the filled-in details, generate a new xml file and upload the same once again.
225. While uploading the XML file in ACES, an error appeared as "File corrupt. Regenerate and upload the file again". What to do now?
- This error appears only when user has tampered with the XML file generated by the utility. Please ensure that you upload the original XML file generated by the utility without tampering/opening for modification.
226. Do I get any intimation in case of rejection of uploaded XML file?
- Yes, an e-mail will be automatically sent to the registered e-mail ID available in the ACES registration database. Please ensure that the e-mail ID in the ACES registration database is updated.
227. Can I view the return, after filing?
- Yes, the returns filed can be viewed after logging into ACES through RET > View Original ST3 (or) RET > View ST3.
228. How do I file Revised return?
- You can revise your ST-3 return once within 90 days from the date of filing the original return, through RET > Fill ST3 > Revise ST-3. Please ensure that in the revised return at A1 you select No for ‘Original Return’ option and Yes for ‘Revised Return’ option.
229. Will I get an acknowledgment after filing the return?
- On successful submission of the return, an acknowledgement with a number in the format: (Registration Number::Type of return::Month and Year of the return) will be generated. This number becomes a reference number (Source Document number) for subsequent correspondence with the department in respect of that return.
230. Are the instructions for the return period Oct, 2013 - Mar, 2014 available?
- Yes. Please go through the Instruction sheet and Guidelines given in the new excel utility, ‘What’s New’ and ‘Help’ sections of ACES Website. In case of doubts relating to offline utility or the ACES software application, you may e-mail to ACES Service Desk at aces.servicedesk@icegate.gov.in or call toll-free 1800 425 4251. For any other queries on legal/procedural matters, please contact your jurisdictional Central Excise or Service Tax officer.
231. BASIC DETAILS SECTION
232. How do I get the form as an LTU assessee in offline utility?
- There is an option for LTU in the first sheet. If you are filing return as LTU (Large Tax Paying Unit), then select the option as Yes.
233. How do I fill up the LTU City?
- The LTU City need not be filled up and will be auto fetched by the system after uploading.
234. A6 - How to select the LTU option?
- Assessees, falling under the jurisdiction of any Large Tax Payers Unit (LTU) must select ‘Yes’ in ‘A6.1’. Also, ‘A6.2 – ‘ will be fetched from the registration database of the Assessee, when the XML file is uploaded, and it will be reflected when the return is viewed. These fields are auto-populated in the online version.
235. What are the fields which are populated by the system and need not be entered while filling up the offline utility
- The auto fetched fields after uploading are:
  a. Name of the Assessee.
  b. LTU City in case of LTUs
  c. Premises Code.
236. Is the RC No. field case sensitive?
- No. Even if the RC No. is entered in lower case, the same will be automatically converted into Upper case.
237. When I try to enter Premises Code, I am not allowed. What do I do?
- Premises Code will be auto fetched by the system after uploading and need not be entered in the form.
238. A1 - What is to be selected for the type of return?
- One of the options (ORIGINAL / REVISED) can be selected, as applicable to the Assessee, for filing the return.
239. A2 - What to enter in this field?
- 15 digits PAN-based or Temp-based STC number (Registration No.) should be entered.
240. A3 - Name of the Assessee?
- This field is disabled for any entry by the assessee in the offline Utility. Based on the registration number entered, the name will be fetched from the registration database of the assessee, when the XML file is uploaded, and it will be displayed when the return is viewed. This field is auto-populated in the online version.
241. What A4 & A5 fields are meant for?
- These fields are meant for the Financial Year and Period of Return required to be entered/selected by the Assessee.
242. A7 - How to find out Premises Code?
- This field need not be entered by the Assessee. It will be fetched from the registration database of the assessee when the XML file is uploaded and it will be reflected when the return is viewed. This field is auto-populated in the online version.
243. A8 - Constitution of the Assessee?
- The Assessee has to select the appropriate category applicable to them and as already furnished in form ST-1. When ‘, ‘or ‘ is selected in the ” field system will display the ST3 return with payable/paid sheets in quarterly format and for other category of Constitution the payable/paid sheets in monthly format
244. A9 - List of Taxable Services - How to select many services?
- To add more than one service, click on the ‘Add Service’ button. Similarly, if any service has been wrongly selected, it can be deleted by clicking on the ‘Red colour cell’ and then click on the ‘Delete Service’ button.
245. How to fill up Service wise details?
- When the taxable services applicable are selected, the service-wise payable screens will be populated and displayed for filling up the data.
246. Is there any provision to enter specific rate of Tax?
- Yes. Table is available in ‘B1.16 / B2.16’ for entering details of services liable to specific Rate of Tax. The rates applicable can be entered along with the taxable units chargeable, in this table. The system will calculate & populate the Service Tax payable
247. Is Cess payable on the Tax calculated under specific rate of tax?
- Yes. EDU Cess at 2% and SHE Cess at 1% on Net Service Tax payable has to be paid. If the Cess rates are entered by the Assessee, the system will calculate & populate the amount of EDU/SHE Cess payable under ‘B1.20’ and ‘B1.21’.
248. What is R & D Cess deduction?
- Notification No. 14/2012 ST dated 17.03.2012 provides for exemption of R & D Cess payable on import of Technology.
249. How to enter the value of services imported?
- This can be entered under ‘B2.5’.
250. PAYABLE SECTION
251. A10 - Category of Registrant/ Partial Reverse Charge: What is Partial Reverse Charge?
- a.The details are available in the Notification No. 30/2012-ST dated 20-06-2012, effective from 01-07-2012, made applicable to certain specified services.
  b. Service Provider has to select ‘A10.1’.
  c. If the Assessee is liable to pay tax under Partial Reverse Charge as Provider, he will have to select ‘Yes’ under ‘A10.1’ and ‘A10.3’ and select the percentage from ‘A10.5’.
  d. Service Receiver has to select ‘A10.2’.
  e. If the Assessee is liable to pay tax under Partial Reverse Charge as Receiver, he will have to select ‘Yes’ under ‘A10.2’ and ‘A10.4’ and select the percentage from ‘A10.6’.
252. How to enter the details of exemptions, if any availed, under particular Notification No.?
- For entering details of any exemption availed under a Notification and entering the amount of exemption claimed, the below mentioned steps have to be followed:
  a. ‘A11.1’ – This field should be selected as ‘YES’.
  b. ‘A11.2’ – After selecting ‘YES’ in ‘A11.1’ this field will be enabled. A drop down list of Notification No.(s) / Sl. No will be enabled and displayed in ‘A11.2’, relevant for the selected service. The Assessee can select the Exemption Notification No. / Sl. No. to be availed by him. The assessee should select the Notifications and Sl.Nos. from the drop-down only and should not enter the numbers. Entering of text / No’s is not allowed in these fields.
253. How to avail abatement?
- ‘A12.1’ – This field should be selected as ‘YES’.
  b. ‘A12.2’ – After selecting ‘YES’ in ‘A12.1’, this field will be enabled. A drop down list of Notification No(s) / Sl No will be enabled and displayed in A12.2, relevant for the selected service. The Assessee can select the Abatement Notification No / Sl No availed by him. The assessee should select the Notifications and Sl.No’s from the drop-down only and should not enter the numbers. Entering of text / No’s is not allowed in these fields.
254. What to fill up in B1.1 to B1.6?
- The texts in the rows are self-explanatory and for further details, you may go through the Instruction sheet available in the notified statutory Form ST-3 vide Notification No: 01/2013-Service Tax dated 06th March 2013. For any further clarification on these fields, the jurisdictional Superintendent/Assistant Commissioner/Deputy Commissioner may be approached.
255. How to fill up B1.8/B1.11?
- If the Assessee desires to fill up any amount in these fields, they should have selected the applicable Notifications from ‘A11/A12’. Otherwise ‘B1.8/B1.11’ cannot be filled.
256. How to fill up B1.15 / B2.15, Service Tax Rate-wise Break up of NET TAXABLE VALUE for ADV rate?
- When various Tax Rates are filled up in this table against certain taxable value, the total of such rate-wise values should be equal to the ‘NET TAXABLE VALUE’ arrived in ‘B1.14’. ‘B1.15/B2.15’ is meant only for filling up ad valorem rates of applicable Tax only.
257. How do I fill up specific rate of Tax as a provider of 'Foreign Exchange Broker Service' / 'Lottery Ticket Selling Agents'?
- Specific illustrations are given for the said services and are available in ACES Website under Help section.
258. How Cess payable amount has to be calculated on Service Tax payable whether before deducting R&D cess or on Net Service Tax payable after deducting R&D cess?
- Educational Cess and Secondary Higher Educational Cess are calculated @ 2% and 1% respectively, on the Net Service Tax payable amount arrived at ‘B1.19/B2.19’ after deduction of R&D Cess.
259. If my tax liability is to the extent of 25% of the Value and tax rate is 12%, can I pay tax at 3% for the full value?
- No. The extent of tax liability on certain specified percentage of value is prescribed in the Notifications issued for computing the Taxable value. This does not change or modify the % of tax liability. The Rate of Tax remains the same as 12% only. If an incorrect rate is entered by the user, the return will be rejected on uploading, during the XML processing.
260. If I am eligible to avail abatement from the value to the extent of 60% and liable to pay tax on the 40% of the value, can I pay tax @ 4.8% on the unabated value instead of 12%, as the ultimate tax payment amount is going to be the same?
- No. The law provides for abatement from Value. However, tax is liable to be paid only at the prescribed rates. In the issue in question, 40% of the value should be computed and tax should be paid on that abated value @ 12%. If an incorrect rate is entered by the user, the return will be rejected on uploading, during the XML processing.
261. Will my return be rejected, if I enter an invalid Tax or Cess rate in B1.15 / B2.15 or B1.16 / B2.16?
- Yes.
  (a) In the offline mode, if the XML file is uploaded with invalid tax / cess rates, then the XML file for the return will be rejected.
  (b) In the online mode, the system will give an alert message, if any invalid tax / cess rate is entered and will not allow the user to proceed further until a valid tax/cess rate has been entered.
262. How do I ascertain the correct rate of Tax and Cess?
- Please refer to the Notification relevant to the service selected or in case of doubt, contact the jurisdictional officer for clarification on the applicable rate of tax / cess.
263. I am a provider of the service, "Promotion, marketing, organizing or assisting in organizing games of chance including lottery, etc.,". How do I fill up the Payable Sheet as this service is liable only for Specific rate of tax?
- Please enter the applicable amount at B1.1 to B1.12. System will calculate the Net Taxable Value at B1.14 based on the entries made.
  STEP 1: At B1.15, in the ADV rate table, enter the Adv. tax rate / EC / SHEC as zero and applicable taxable value for the respective months/quarters.
  STEP 2: At B1.16 / B2.16, in the Specific rate table, enter the specific tax rate / EC / SHEC and applicable taxable units for the respective months/quarters.
  Please be noted that when the Taxable value is greater than zero and the ADV rate of Tax is also zero in B1.15 / B2.15, then the entry in Specific Rate table in B1.16 / B2.16 is mandatory.
264. Abatement notification is applicable to my service. How to enter the rate of tax while availing Abatement?
- For availing abatement notification, please select the abatement notification no. and sl.no. Applicable to your service at A12.
  Please enter the applicable amount at B1.1 to B1.12. At B1.11, enter the amount claimed as abatement. System will calculate the Net Taxable Value at B1.14 based on the entries made.
  At B1.15, in the ADV rate table, enter the applicable Adv. tax rate / EC / SHEC and taxable value for the respective months/quarters.
  Please be noted that the tax rates should not be abated.
  
  For example, the return will be rejected if abated tax rates, as shown below, are entered.
  1. Advalorem Tax Rate .61 entered in provider section in payable sheet for the service “Air travel agent services” is not valid.
  1. Advalorem Tax Rate 4.81 entered in provider section in payable sheet for the service “Transport of persons by cruise ship” is not valid.
  1. Advalorem Tax Rate 3 entered in provider section in payable sheet for the service “Tour operator Services” is not valid.
  Example: Mr.A is providing Rent-a-cab scheme operator service. His gross taxable amount is Rs.10, 00,000/- during the period October-March, 2013-2014. He is availing abatement notification no.26/2012-S.T. dated 20.06.2012 As per sl.no.9 of the said notification; Mr. is liable to pay service tax on 40% of the amount charged for providing the said taxable service.
  Correct Method Gross Taxable Amount (B1.1) = 10, 00,000. Abatement Claimed (60% of 10, 00,000/-) (B1.11) = 6, 00,000. Net Taxable Value (B1.14) is Rs. 4, 00,000. Tax Payable (B1.15) is 12% on Rs. 4, 00,000.
  If the above is entered in the following manner, the entries will not be accepted by the system.
  Incorrect Method Gross Taxable Amount (B1.1) = 10, 00,000. Effective tax payable is 40% of Rs.10, 00,000. Abatement Claimed (B1.11) = 0. Net Taxable Value (B1.14) is Rs. 10, 00,000. Tax Payable (B1.15) is 4.8% (i.e., 40% of 12%) on Rs. 10, 00,000.
  In this example, 4.8% is not a valid tax rate for Rent-a-cab scheme operator service. Hence system will not accept this tax rate in online filing of return and reject the XML file uploaded in offline mode.
  In other words, you should claim abatement only from the value and not from the tax rate while availing abatement on any service.
  The rate of service tax should be as prescribed.
265. ADVANCE PAYMENT SECTION
266. Where do I enter the advance amount of Tax deposited?
- It should be entered in the table under part ‘C’ meant for Service Tax payable in advance. Any Challan No. entered in this section should be entered again in ‘H1’ also.
267. PAID SECTION
268. What is meant by book adjustment in the case of specified Govt. Departments?
- This is meant for those Central Govt. Departments who are liable to pay Service Tax for the services provided by them but the payment of the same is effected by way of ‘Adjustment of entries’ and not by Cash.
269. How to enter the amount of late fee paid for delayed filing of returns?
- A separate row no. ‘G10’ has been provided for this purpose in the return.
270. How to calculate the late fee for delayed filing of the return?
- New provision has been made in ACES to identify the delayed filling of returns, no. of days of delay beyond the due date and the late fee payable. After the returns are successfully filed, these details will be populated and displayed in the view option for Assessee, as provided in Rule 7C of Service Tax Rules, 1994.
271. Can I enter the payment of Arrears by CENVAT adjustment?
- Yes. This amount can be entered in PART ‘G’.
272. Where to show arrears of taxes in the ST3 return?
- Arrears of taxes should be shown in Part G.
273. CHALLAN DETAILS SECTION
274. How to enter multiple Challans in ST-3?
- Multiple Challans can be entered in the Challan Details Section in ‘H1, H2’ and Advance Payment details in Section C with Add Challan facility available therein.
275. What Challan details have to be entered in H1?
- If any payment of Tax / Cess / Other Payments have been made by cash, all relevant challan nos. shall be entered in this table with their amounts which is mandatory. Even if they are entered in their respective sections, all Challan No’s should be entered in ‘H1’.
276. CENVAT SECTION
277. What is the restriction for entering an amount in I3.1.2.6 /I3.2.2.6/I3.3.2.6 and such other specific fields?
- If any amount is entered in these fields, the details of the same should be given in the text field provided therein.
278. Can I enter EDU Cess and SHE Cess combined together in CENVAT section?
- No. Separate tables have been provided for entries of credit taken and utilized on Educational Cess & Secondary higher educational Cess.
279. ISD SECTION
280. Can I add ISD as new category of registrant at the time of filling up the return?
- No. Such Assessee will have to file amendment application in ACES to add ISD as a category and only after that they can file the return.
281. CFC SECTION
282. What is CFC?
- CFC refers to Certified Facilitation Centre.
283. Is there provision to enter the details of Certified Facilitation Centre (CFC)?
- Yes. This has been provided at ‘PART L’ in the Distributor sheet of the ST3 return.
284. Where to find the FAQs on CFC?
- The FAQs on CFC are available in the ACES homepage under CFC menu option.
285. Balance Sheet
286. What is a balance sheet?
- Balance Sheet is a statement showing financial position of the business on a particular date. It has two sides. One is, source of funds i.e Liabilities, the left side of the balance sheet and application of funds i.e assets, the right side of the balance sheet.
287. Why is balance sheet prepared?
- It is prepared after preparing trading and profit and loss account and has balances of real and personal accounts grouped and arranged in a proper way as assets and liabilities. It is prepared to know the exact financial position of the business on the last date of the financial year.
288. What is an asset?
- An asset is anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value. Assets include cash on hand (cash & money in the bank), accounts receivable, reimbursable expenses, inventory, and any equipment that is of value.
289. What is a liability?
- A liability is an obligation or debt of your business from past transactions or events.
  Liabilities are money owed by the business. An example of liability is a loan for your business, accounts payable, credit cards payable, or taxes you still need to pay.
290. What is equity?
- Equity is the owners claim on the assets of the business. It represents assets that remain after deducting liabilities. Equity is what you put in or take out of the business. Examples of equity are opening investments, contributions, owners capital or retained earnings.
291. What are adjustment entries? Why are they passed?
- Adjustment entries are the entries which are passed at the end of each accounting period to adjust the nominal and other accounts so that correct net profit or net loss is indicated in profit and loss account and balance sheet may also represent the true and fair view of the financial condition of the business.
  
  It is essential to pass these adjustment entries before preparing final statements. Otherwise in the absence of these entries the profit and loss statement will be misleading and balance sheet will not show the true financial condition of the business.
292. What do you mean by fixed assets?
- A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be consumed or converted into cash any sooner than at least one year’s time. Buildings, real estate, equipment and furniture are good examples of fixed assets.
293. What do you mean by accounts payable?
- Accounts payable are debts that must be paid off within a given period of time in order to avoid default. For example, at the corporate level, AP refers to short-term debt payments to suppliers and banks.
294. What do you mean by long term liabilities?
- Long term liaiblities are liabilities with a future benefit of over one year. Long-term liabilities include items like debentures, loans, deferred tax liabilities and pension obligations.
295. What is trial balance?
- Trial Balance is a list of closing balances of ledger accounts on a certain date and is the first step towards the preparation of financial statements. It is usually prepared at the end of an accounting period. Asset and expense accounts appear on the debit side of the trial balance whereas liabilities, capital and income accounts appear on the credit side. If all accounting entries are recorded correctly and all the ledger balances are accurately extracted, the total of all debit balances appearing in the trial balance must equal to the sum of all credit balances.
296. What is common stock?
- In the event of bankruptcy, common stock investors receive any remaining funds after bondholders, creditors (including employees), and preferred stock holders are paid.
297. What do you mean by retained earnings?
- In most cases, companies retain their earnings in order to invest them into areas where the company can create growth opportunities, such as buying new machinery or spending the money on more research and development.
298. What is opening and closing balance?
- Opening balance: The opening balance is the amount of funds in a company’s account at the beginning of a new financial period. It is the first entry in the accounts, either when a company is first starting up its accounts or after a year-end.
  
  Closing balance: A closing balance is the amount remaining in an account, positive or negative, at the end of an accounting period or yearend.
299. What do you mean by prepaid expense and outstanding expense?
- Prepaid expense: Making payment during the current financial year but actual expenditure is related to next financial year is prepaid expense. This type of expenditures arises in the case of advance payment of taxes on certain categories.
  
  Outstanding expense: Making liability provision for the expenses relating to current year but actual payment to be incurred in the next financial year is outstanding expenses. Example of this case may be salary arrears.
300. Expenditure
301. What are the different types of expenditures considered for the purpose of accounting?
- For the accounting purpose expenditures are classified in three types:
  
  Capital Expenditure is an amount incurred for acquiring the long term assets such as land, building, equipments which are continually used for the purpose of earning revenue. These are not meant for sale. These costs are recorded in accounts namely Plant, Property, Equipment. Benefits from such expenditure are spread over several accounting years. . E.g. Interest on capital paid, Expenditure on purchase or installation of an asset, brokerage and commission paid.
  
  Revenue Expenditure is the expenditure incurred in one accounting year and the benefits from which is also enjoyed in the same period only. This expenditure does not increase the earning capacity of the business but maintains the existing earning capacity of the business. It included all the expenses which are incurred during day to day running of business. The benefits of this expenditure are for short period and are not forwarded to the next year. This expenditure is on recurring nature. Eg: Purchase of raw material, selling and distribution expenses, Salaries, wages etc.
  
  Deferred Revenue Expenditure is a revenue expenditure which has been incurred during an accounting year but the benefit of which may be extended to a number of years. And these are charged to profit and loss account. E.g. Development expenditure, Advertisement etc.
302. What are capital expenditures? Is it Ok to consider these expenditures while calculating the profitability of during a certain period?
- Capital Expenditure is an amount incurred for acquiring the long term assets such as land, building, equipments which are continually used for the purpose of earning revenue. These are not meant for sale. E.g. Interest on capital paid, Expenditure on purchase or installation of an asset, brokerage and commission paid.
  
  No, Capital expenditure should not be considered while calculating profitability as benefits incurred from the capital expenditure are long term benefits and cannot be shown in the same financial years in which they were paid for. They need to be spread over a number of years to show the true position in balance sheet as well as profit and loss account.
303. Explain Revenue Expenditure. Does it affect the profitability statement in a period? Explain.
- Revenue Expenditure is the expenditure incurred in one accounting year and the benefits from which is also enjoyed in the same period only. This expenditure does not increase the earning capacity of the business but maintains the existing earning capacity of the business. It included all the expenses which are incurred during day to day running of business. The benefits of this expenditure are for short period and are not forwarded to the next year. This expenditure is on recurring nature.
304. Explain deferred expenditures. How are these expenses dealt with in profitability statement?
- Deferred Revenue Expenditure is revenue expenditure, incurred to receive benefits over a number of years say 3 or 5 years. These expenses are neither incurred to acquire capital assets nor the benefits of such expenditure is received in the same accounting period during which they were paid. Thus they don’t affect profitability statement as they are not transferred to the profitability statement in the period during which they are paid for. They are charged to profit and loss account over a number of years depending upon the benefit accrued.
305. Double entry system
306. What is the principal of Double Entry system of accounting? What are the advantages of Double Entry system of accounting?
- The principal of Double Entry system of Accounting is “Every debit has a corresponding credit” hence the total of all debits has to be equal to the total of all credits. In simple words, every business transaction affects two accounts. If one account is debited then the other account will be credited with the similar amount. For example: if the business purchases a machinery worth Rs. 500000, then machinery account gets debited with amount Rs. 500000 as the business is receiving an asset for its operation, on the other side cash account automatically gets credited with the same amount of Rs. 500000 as cash is going out of the business.
  
  Advantages :
  - It considers both the aspects of business transaction.
  - Arithmetic accuracy of the accounting records can be checked and verified by preparing trial balance.
  - Correct results of the operations can be ascertained by preparing Final Accounts.
  - Correct valuation of assets and liabilities at any point of time by preparing Balance sheet
307. What are the rules of double entry book keeping for various types of accounts?
- Following are the basic rules of double entry book keeping for various types of accounts:
  •Personal Account:Debit the Receiver, Credit the Giver
  •Real Account:Debit what comes in, Credit what goes out
  •Nominal Account:Debit all the Expenses, Credit all the Incomes
308. Depreciation
309. What is depreciation? What are the causes of depreciation? Is it a cost? Why?
- Depreciation is a permanent, gradual and continuous reduction in the book value of the fixed asset. Except Land all the fixed assets e.g. Car, Machinery, Furniture etc depreciates in value making the asset useless after the end of a certain period.
  
  Following are the causes of Depreciation:
  
  • Wear and Tear due to regular use of the asset
  • Deterioration occurs with the passage of time, whether the asset is in use or not
  • Damages done to the assets due to an accident like fire, mishandling etc.
  • Depletion of Asset.
  • Obsolescence i.e. due to new technology in use, new inventions, innovations etc.
  Yes, depreciation is a cost. It is a historical cost, which is charged against profits of the organisation reducing the profitability. It is a non-cash cost as it is never paid or incurred in cash.
310. What is the need of depreciation account?
- According to the matching principle of accounting, the costs incurred in the accounting year should be matched with the revenue or income earned during the same accounting year. Thus, it is necessary to spread the cost of fixed asset less scrap or realizable value after the useful life of the fixed asset is over and this process of ascertain the same is called depreciation accounting.Thus,depreciationaccount is needed for mainly two purposes:
  To ascertain due profits and to represent the value of the fixed asset at its unexpired cost i.e book value of the asset less depreciation.
311. What is the effect of depreciation of assets on profits received by owners?
- Depreciation forms a part of cost which is used for arriving at correct estimation of profits, which then is distributed to the owners of the business in the form of dividend. Addition of depreciation to the cost reduces the amount of distributable profits. By maintaining a depreciation account a part of the distributable profit is retained in the business as a reserve which is used to purchase new machinery or for other purposes in the future which reduces the profits or dividends received by the owners.
312. Explain straight line method to calculate depreciation. What are it advantages and limitations?
- It is the simplest and most often used technique. The components used to calculate Straight Line Method are:
  
  • Cost of Asset
  • Estimated Scrap vale-is the value of the asset at the end of life of the asset
  • Estimated life of Asset
  
  Formula to calculate:
  
  Depreciation = (Cost of Asset-Estimated Scrap Vale)/Estimated life of Asset in years
  
  The main advantage of this method is that an equal amount of depreciation is charged every year throughout the life of the Asset which makes the calculation of depreciation easy.
  
  But the limitation of this method is that the amount of depreciation charged on the asset in the later years is high due to the reduced value of the asset.
313. Explain Written Down Value (Reducing Balance) method to calculate depreciation. What are the benefits of this method?
- In Written Down Value Method, the rate of depreciation is predetermined. This is done by deducting the amount of depreciation charged before from the balance of cost of asset (Cost of Asset-Estimated Scrap Value). In simple words, in the first year the amount of depreciation charged is high and it gradually starts decreasing during the subsequent years.
  
  Formula to calculate:
  
  Depreciation = 1-
  N= number of years
  R= Residual/Scrap Value
  C=Cost of the asset
  
  The main benefit of this method is that it recognises this fact that in the initial phase of an asset, costs of maintenance, repairs etc. are less which goes on increasing with the progressing life of the asset. Thus, by charging higher amount of depreciation in the initial years and gradually decreasing the amount of depreciation counterbalance both the lower amount of repairs and maintenance cost in the initial years and the gradual increase later on. It can be noted here that the written down value can never be zero.
314. What method of depreciation calculation is used to calculate the tax liability according to Income Tax Act, 1961?
- According to Income Tax Act, 1961 Written Down Method of depreciation is used to calculate the tax liability. In this method, depreciation is charged at predetermined rate, which is calculated on the balance of cost of asset less amount of depreciation previously charged. The rate at which the depreciation will be calculated is also specified in the Income Tax Act 1961.
315. How depreciation is calculated as per schedule XIV of Companies Act, 1956?
- As per Schedule XIV of Companies Act, 1956 the company can calculate the depreciation by using either Straight Line Method or Written Down Value Method. The rate to calculate depreciation is also specified in Schedule XIV. If any addition has been made to any asset during the financial year, depreciation on such an asset will be calculated on pro-rata basis from the date of such addition or upto the date on which such asset has been sold.
316. How are the fixed assets categorized to calculate the depreciation as per schedule XIV of Companies Act, 1956?
- To calculate depreciation as per Schedule XIV of Companies Act, 1956 the fixed assets are categorized as below:
  - Buildings-Factory Buildings as well as Administration buildings
  - Plant and Machinery
  - Furniture
  - Vehicles
  - Computer Installations
317. Does depreciation generate funds for replacement of assets?
- Yes, depreciation generate funds for replacement of assets. When depreciation is charged against the asset, a significant portion is taken out of the profits every year during the lifetime of the existing assets, and is retained and accumulated without being distributed to the owners as dividend. Thus at the end of the life of the existing asset, the business will have some funds to replace old asset with the new one.
318. Compare: Depreciation as per Companies Act and Income Tax Act
- Under the Companies Act: Depreciation is computed either using the straight line method or written down value method. In straight line method the amount of depreciation is uniform for all the years where in written down method the amount of depreciation is highest in the first year and gradually decreases in the subsequent years.
  
  Under Income Tax Act: Depreciation is computed using written down value method. Also it is charged on the block of assets and not on individual assets. The block of assets means a group of assets for which the same rate of depreciation is applicable.
319. Ledger
320. What is a Ledger? What do you mean by Ledger Posting?
- Ledger is the book where the transactions of similar nature pertaining to a person, asset, liability, income or expenditure are drawn from the journal or subsidiary books where the transactions are recorded in a chronological order and posted account wise in the Ledger account. Ledger maintains all types of accounts i.e. Personal, Real and Nominal Account.
  
  All the business transactions are first recorded in Journal or Subsidiary books in a chronological order when they actually take place and from there the transactions of similar nature are transferred to Ledger and this process of transferring is called as Ledger Posting.
321. What are control ledgers? What are the purposes of maintaining it?
- In a business, sometimes it is not feasible to carry accounts of all the suppliers and customers in the main ledger. In such cases apart from General or main ledger, the control ledgers are maintained. Control ledgers records the individual accounts. In the end of the period, balance shown in the main ledger has to tally with the balance in the individual ledger accounts maintained in the control ledger. Purposes of maintaining control ledgers are:
  - Sundry Debtors
  - Sundry Creditors
  - Advances to Staff
322. What do you mean by Balancing of Ledger Account?
- To know the net effect of all the business transactions recorded in the ledger account, the accounts need to be balanced. Thus, Balancing of Ledger Account means the balances of Debit and Credit side should be equal and this involves following steps:
  
  -First total of both the sides are taken.
  
  -Secondly difference between the totals of both the sides is calculated.
  
  -If the debit side is in excess to the credit side then place the difference on the credit side by writing By Balance c/fd.
  
  – If the total of credit side is in excess to the debit side, place the difference on the debit side by writing To Balance c/fd.
  
  -After placing the difference on the appropriate side, make sure the totals of both the sides are equal.
323. Profit and Loss account
324. Why are Profit and Loss Accounts prepared?
- Profit and Loss Account is a period statement which is prepared to show the profit or loss incurred by the Organization in the year for which it is prepared. It is prepared to disclose the result of operations of all the business transactions during a given period of time. It is also known as profitability statement .It is the final result of all business transactions of the organization. Profit and Loss account has four components namely Manufacturing Account, Trading Account, Profit and Loss Account and Profit and Loss Appropriation Account. Gross profit or Gross loss so calculated in trading account is taken to the profit and loss account.
325. What are the components of Profit and Loss Account? Explain them
- All expenses, losses, incomes and gains are the components of Profit and Loss Account:
  
  Expenses and losses are shown on the debit side of Profit & Loss Account. Following is the list:
  
  Administrative Expenses:
  - Office Salaries
  - Postage & Telephone
  - Traveling & Conveyance
  - Legal Charges
  - Office Rent
  - Depreciation
  - Audit Fees
  - Insurance
  - Repairs & RenewalsSelling and Distribution Expenses:
  - Advertisement
  - Carriage Outward
  - Free Samples
  - Bad Debts
  - Sales CommissionIncomes and Gains are shown on the credit side of the Profit & Loss Account. Following is the list:Gross Profit (balance forwarded from the Trading account)Other Income:
  - Discount received
  - Commission received
  - Non-Trading Income
  - Interest received
  - Bad Debts recovered
  - Rent received
  - Profit on the sale of assets
326. Wealth Tax
327. What is Wealth tax and on whom and when it is applicable?
- Wealth Tax is applicable on Individual, HUF and a company if the net wealth of such person exceeds Rs. 30 Lakh. Wealth tax is charged @ 1% on net wealth exceeding Rs. 30 Lakh.
328. What is the meaning of net wealth?
- Net wealth means assets minus debt incurred for such asset.
329. What is the meaning of asset as per Wealth Tax Act?
- Asset includes:
  - Motor Cars (Other than used by the assessee in the business of running them on hire or used by the assessee as stock in trade)
  - Yachts, boats and aircrafts (other than used by the assessee for commercial purposes)
  - Jewellery, bullion, furniture, utensils or any other article made wholly or partly of gold, silver, platinum or any other precious metal. (other than used by the assessee as stock in trade)
  - Any building or land (with some exceptions like):
  o   One residential home is exempt from Wealth Tax or urban land measuring 500 sqm or less.
  
  o   Any residential property which has been let out for a minimum period of 300 days in the previous year
  
  o   Any house occupied by the assessee for the purpose of any business or profession carried on by him
  
  o   Commercial establishments or complexes
  - Cash in excess of Rs. 50000 in case of individual or HUF
  - Deemed Assets i.e assets transferred without consideration to family etc.
  - Assets of minor child barring some exception
  - Value of assets in partnership firm to be clubbed with the assets of partner
330. What is the last date of filing return?
- Last date to file the return is:
  - 31^st July for Individuals or HUF
  - 30^th Sep for Company and individual or HUF whose accounts are required to be audited u/s 44AB
331. What can happen if I do not pay the tax or file the return?
- Penalties:
  - Belated or revised return can be filed within one year from the end of assessment year after paying 1% per month of tax as penalty for delay.
  - Penalty upto 100% of tax in case of non-payment of wealth tax
  - Penalty upto 500% of tax in case of concealment of wealth tax
  - In case of willful default, imprisonment upto 7 years can be imposed
332. Who are not liable to pay wealth tax?
- Wealth tax shall not be charged to:-
  - Companies registered under section 25 of companies act,1956
  - Co-operative society
  - Social hub
  - Political party
  - Mutual fund specified under section
333. Step by step sprocedure for wealth tax returns filing?
- Step -1: All assets which are falling under the wealth tax definition would be clubbed to arrive at gross wealth. Its current value should be considered while doing this computation.
  
  Step -2: All debts owed in connection with assets bought would be deductible.
  
  Step -3: Net taxable wealth would be arrived.
  
  Step-4: Compute wealth tax at 1% above Rs. 30 Lakh
  
  Step-5: Pay wealth tax online/offline through ITNS – 282
  
  Step -6: File wealth tax return before 31^st july with income tax office of your respective circle/ward.
334. Can I file wealth tax online?
- Yes, from the F.Y 2014-15 onwards wealth tax can be filed online. Form BB has to be used to file the wealth tax returns.
335. I invest in stocks, mutual funds or debentures. Do I need to pay wealth tax?
- No, these are exempted from wealth tax.
336. I am paying income tax. Why do I need to pay wealth tax?
- Income tax and wealth tax are two different things. You need to pay income tax based on the residential status and the net taxable assets you have after the valuation date but before the due date.
337. I have taken a housing loan, and purchased a house do I need to pay wealth tax?
- While computing your net taxable wealth, you need to include your current value of the house and reduce your housing loan (debts owned). Finally compute the net taxable wealth. If this is exceeding Rs.30 lakh you need to pay a tax of 1% on the amount exceeding Rs. 30 lakh.
338. Which challan has to be used to pay Wealth Tax?
- Challan ITNS 282 has to be used for wealth tax payment.
339. What is the due date for payment of wealth tax?
- Companies, individuals and HUF are liable to pay wealth tax on yearly basis on or before the return filing.
340. Which forms are used for filing of wealth tax?
- Form BB(Online Return Filing): Wealth Tax Return form in terms of Wealth Tax 1st Amendment Rules, 2014
  Applicable in respect of assessment year 2013-14 and earlier assessment years in the case of individuals, Hindu undivided families and companies.
  
  Form BA(Offline Return Filing): Wealth Tax Return form applicable in respect of assessment year 2013-14 and earlier assessment years in the case of individuals, Hindu undivided families and companies
341. Are NRI’s liable to pay Wealth tax?
- For non residential individual, wealth tax is charged only on assets which are located in India. Assets outside India of NRI are exempt from wealth tax. There is also exemption available to NRI for money brought by him while settling in India u/s 5.
342. Is Wealth tax exempted? If so for whom is it exempted?
- Wealth tax is exempted for the following category:
  - Company registered u/s 25 of companies act, 1956
  - Cooperative society
  - Social club
  - Mutual fund
  - Political party
  - RBI
343. What is the basic Wealth tax exemption limit?
- Basic exemption limit for wealth tax liability is Rs. 30 lakh. So for up to wealth (assets) of Rs. 30 lakh, you have to no need to pay tax.
344. What is the computation process of Wealth Tax?
- Steps for calculation of wealth tax liability:
  1. Compute value of total assets on the date of 31/3 of previous year. The asset should be included in the definition of asset.
  2. Reduce amount of debt taken for that asset which is still pending for payment on 31/3.
  3. Minus exemption available.
  4. Minus basic exemption limit of Rs. 30,00,000
  5. Calculate net amount and charge 1% tax on it.
  So the basic step to compute and pay wealth tax is get knowledge of taxable assets under wealth tax act. After that we will shift to wealth tax exemption and valuation of various assets. Final step will be online return filling of wealth tax.
345. AUDIT REPORT
346. What do you mean by audit?
- The dictionary meaning of the term “audit” is check, review, inspection, etc. Section 44AB gives the provisions relating to the class of taxpayers who are required to get their accounts audited from a chartered accountant. The audit under section 44AB aims to ascertain the compliance of various provisions of the Income-tax Law and the fulfillment of other requirements of the Income-tax Law. The audit conducted by the chartered accountant of the accounts of the taxpayer in pursuance of the requirement of section 44AB is called tax audit.
347. What is the objective of tax audit?
- One of the objectives of tax audit is to ascertain/derive/report the requirements of Form Nos. 3CA/3CB and 3CD. Apart from reporting requirements of Form Nos. 3CA/3CB and 3CD, a proper audit for tax purposes would ensure that the books of account and other records are properly maintained, that they faithfully reflect the income of the taxpayer and claims for deduction are correctly made by him. Such audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of accounts before the tax authorities and considerably save the time of Assessing Officers in carrying out routine verifications, like checking correctness of totals and verifying whether purchases and sales are properly vouched for or not.
348. As per section 44AB, who is compulsorily required to get his accounts audited,i.e. who is covered under tax audit?
- As per section 44AB, following persons are compulsorily required to get their accounts audited :
  
  • A person carrying on business, if his total sales, turnover or gross receipts (as the case may be) in business for the year exceed or exceeds Rs. 1 crore.
  
  • A person carrying on profession, if his gross receipts in profession for the year exceed Rs. 25 lakhs.
  
  • A person who is eligible to opt for the presumptive taxation scheme of section 44AD (*) but he does not opt for the same and claims the profits or gains for such business to be lower than the profits and gains computed as per the presumptive taxation scheme of section 44AD and his income exceeds the amount which is not chargeable to tax.
  
  (*) For provisions of section 44AD refer tutorial on “Tax on presumptive basis in case of certain eligible business”.
  
  • A person who is eligible to opt for the presumptive taxation scheme of sections 44AE (*) but he does not opt for the same and claims the profits or gains for such business to be lower than the profits and gains computed as per the presumptive taxation scheme of sections 44AEE.
  
  (*) For provisions of sections 44AE refer tutorial on “Tax on presumptive basis in case of certain eligible business”.
  
  • A person who is eligible to opt for the taxation scheme prescribed under section 44BB (*) or section 44BBB (*) but he does not opt for the same and claims the profits or gains for such business to be lower than the profits and gains computed as per the taxation scheme of these sections.
  
  (*) section 44BB is applicable to non-resident taxpayers engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire basis to be used in exploration of mineral oils. Section 44BBB is applicable to foreign companies engaged in the business of civil construction or erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project.
349. If a person is required by or under any other law to get his account audited, then is it compulsory for him to once again get his accounts audited to comply with the requirement section of 44AB?
- Persons like company or co-operative society are required to get their accounts audited under their respective law. section 44AB provides that, if a person is required by or under any other law to get his accounts audited, then he need not again get his accounts audited to comply with the requirement of section 44AB. Is such a case, it shall be sufficient if such person gets the accounts of such business or profession audited under such law and obtains the report of the audit as required under such other law and also a report by the chartered accountant in the form prescribed under section 44AB, i.e., Form No. 3CA and Form 3CD.
350. What are Form 3CA, 3CB and 3CD?
- The report of the tax audit conducted by the chartered accountant is to be furnished in the prescribed form. The form prescribed for audit report in respect of audit conducted under section 44AB is Form No. 3CB and the prescribed particulars are to be reported in Form No. 3CD.
  
  In case of persons covered under previous FAQ, i.e., who are required to get their accounts audited by or under any other law, the form prescribed for audit report is Form No. 3CA and the prescribed particulars are to be reported in Form No. 3CD.
351. What is the due date by which a taxpayer should get his account audited?
- A person covered by section 44AB should get his accounts audited and should obtain the audit report on or before the due date of filing of the return of income, i.e., on or before 30th September (*) of the relevant assessment year, e.g., Tax audit report for the financial year 2013-14 corresponding to the assessment year 2014-15 should be obtained on or before 30th September, 2014.
  
  In case of a taxpayer who is required to furnish a report in Form No. 3CEB under section 92 in respect of any international transaction or specified domestic transaction, the due date of filing the return of income is 30th November of the relevant assessment year.
  
  The tax audit report is to be electronically filed by the chartered accountant to the Income-tax Department. After filing of report by the chartered accountant, the taxpayer has to approve the report from his e-fling account with Income-tax Department (www.incometaxindiaefiling.gov.in)
352. What is the penalty for not getting the accounts audited as required by section 44AB?
- According to section 271B, if any person who is required to comply with section 44AB fails to get his accounts audited in respect of any year or years as required under section 44AB, the Assessing Officer may impose a penalty. The penalty shall be lower of the following amounts:
  
  (a) 0.5% of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such year or years.
  
  (b) Rs. 1,50,000.
  
  However, according to section 273B, no penalty shall be imposed if reasonable cause for such failure is proved.
353. How do internal and external auditors differ and how should they relate?
- Although they are independent of the activities they audit, internal auditors are integral to the organization and provide ongoing monitoring and assessment of all activities. On the contrary, external auditors are independent of the organization, and provide an annual opinion on the financial statements. The work of the internal and external auditors should be coordinated for optimal effectiveness and efficiency.
  - Internal and external auditors have mutual interests regarding the effectiveness of internal financial controls. Both professions adhere to codes of ethics and professional standards set by their respective professional associations. There are, however, major differences with regard to their relationships to the organization, and to their scope of work and objectives.
  - Internal auditors are part of the organization. Their objectives are determined by professional standards, the board, and management. Their primary clients are management and the board. External auditors are not part of the organization, but are engaged by it. Their objectives are set primarily by statute and their primary client — the board of directors.
354. How does internal auditing maintain its independence and objectivity?
- INDEPENDENCE: The audit charter should establish independence of the internal audit activity by the dual reporting relationship to management and the organization’s most senior oversight group. Specifically, the CAE should report to executive management for assistance in establishing direction, support, and administrative interface; and typically to the audit committee for strategic direction, reinforcement, and accountability. The internal auditors should have access to records and personnel as necessary, and be allowed to employ appropriate probing techniques without impediment.
  
  OBJECTIVITY: To maintain objectivity, internal auditors should have no personal or professional involvement with or allegiance to the area being audited; and should maintain an un-biased and impartial mindset in regard to all engagements.
355. What is the expectation and possibility of extension of date for completion of Tax audit this year considering the circumstances in which the CAs are facing difficulties in completing the task within time.
- Yes it is a new task for the CAs and further since the ITRs were also introduced very late and still the utility to E-file is not free from the mistakes hence it is natural for chartered accountants to have difficulties in completing this new task hence the date of completion of audit should be extended by at least 2 Months but the declaration in this respect should be made immediately instead of waiting for the last day.

Wealth Tax
- 1. Is there any provision for centralized registration?
  - Service providers having centralized accounting or centralized billing system, at their option, can have Centralized registration at one or more places. Commissioner of Central Excise/Service Tax in whose jurisdiction centralized account or billing office of assesses exists, is empowered to grant centralized registration.
- 2. Is it mandatory to have an internal audit activity?
  - Although private companies — those not publicly listed — are not required to have internal auditing, many of them have established an internal audit activity as one of its core organizational governance elements.
    
    A well functioning, adequately resourced internal audit activity that works collaboratively with management and the board is a key resource in identifying risks and recommending improvements to an organization’s governance, risk management, internal controls, and operations. The internal auditors’ unique perspective of independence and objectivity, knowledge of the organization, and understanding and application of sound consulting and audit principles make them ideal for this role.
- 3. Where should the comments/observations in respect of a particular clause of Form No.3CD is to be mentioned in the e-form?
  - Comments / observations, if any relating to the clauses may be given in Form 3CA/3CB Subject to space provided therein. Alternatively, they can be uploaded as PDF file in the field‘Upload other report’ of the portal.
- 4. If there are 10 partners in a firm of Chartered Accountants, then how many tax audits reports can each partner sign in a financial year?
  - As per Chapter VI of Council General Guidelines, 2008 (Tax Audit Assignments under Section 44AB of the Income Tax Act, 1961), a member of the Institute in practice shall not accept, in a financial year, more than the specified number of tax audit assignments as prescribed under Section 44AB of the Income Tax Act, 1961. The specified number of tax audit assignments under Section 44AB of the Income Tax Act, 1961 is 45.
    
    It is further provided in Chapter VI of Council General Guidelines, 2008 that in case of firm of Chartered Accountants in practice, specified number of tax audit assignments means 45 tax audit assignments per partner of the firm, in a financial year.
    
    Therefore, if there are 10 partners in a firm of Chartered Accountants in practice, then all the partners of the firm can collectively sign 450 tax audit reports. This maximum limit of 450 tax audit assignments may be distributed between the partners in any manner whatsoever. For instance, 1 partner can individually sign 450 tax audit reports in case remaining 9 partners are not signing any tax audit report.
    
    It is needless to say that the tax audit assignment should be in accordance with the Standard on Quality Control (SQC) 1: Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements
- 5. Is it possible to e-file the ITR first and then e-file the audit report?
  - e-filing of ITR and Tax Audit report are independent actions. However, it is advisable to first upload tax audit report and then file IT return.
- 6. What are the different types of opinion auditors can express upon completing the auditing?
  - Upon completing the report, the auditor may express one of the following four opinions:
    - Unqualified Opinion
    - Qualified Opinion
    - Disclaimer of Opinion
    - Adverse Opinion
    Unqualified Opinion
    An unqualified opinion is expressed when the auditor concludes that the financial statements give a true and fair view in accordance with the financial reporting framework used for the preparation and presentation of the financial statements. It indicates that:
    - Generally accepted accounting principles are consistently applied in the preparation of financial statements;
    - Financial statements comply with the relevant statutory requirements and regulations; and
    - There is adequate disclosure of all material matters relevant to the proper presentation of financial information (subject to statutory requirements).
    Qualified Opinion
    A qualified opinion is expressed when the auditor concludes that an unqualified opinion cannot be expressed, but that the effect of any disagreement with management is not so material and pervasive as to require an adverse opinion, or the limitation of scope is not so material and pervasive as to require a disclaimer of opinion. A qualified opinion should be expressed as being “subject to’” or “except for” the effects of the matter to which the qualification relates.
    
    Disclaimer of Opinion
    A disclaimer of opinion is expressed when the possible effect of a limitation on scope is so material and pervasive that the auditor has not been able to obtain sufficient appropriate audit evidence and is, therefore, unable to express an opinion on the financial statements.
    
    Adverse Opinion
    An adverse opinion is expressed when the effect of a disagreement is so material and pervasive to the financial statements that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements.
- 7. How can we take the printing of Form 3CB/3CD because the utility does not provide the facility of printing the form. We have been suggested to take the print from the account of the assessee in his work list but there is a problem about his password because we are not filing the ITR on behalf of the assessee and he is taking services of some other professionals in this respect.
  - There is no need to have pass word of the assessee to get the uploaded Form 3CB/3CD because these are also available in the account of the CA also and for this purpose you need the PAN and DOB of the assessee. For this purpose you have to Login in As CA, then go to My Account→ view Forms and you will get the following screen, fill the required details and you will the required Forms in printable format.Since at the time of opening of the Form 3CD/3CB , the PAN and DOB of the assessee will be required and by filling these two you can open and print the forms. So there is no need to have the Pass word of the assessee to take the printout of the Form 3CD/3CB.

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Tax & e-Filing

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